China is trying to buy "a huge chunk" of Facebook. According to Business Insider, Beijing approached a fund that buys stock from former Facebook employees to see if it could help put together a stake large enough "to matter."
Moreover, Citibank is rumored to be trying to acquire as much as $1.2 billion of stock for two sovereign wealth funds, one from the Middle East and the other Chinese. Business Insider reports a third source, from a "very influential" Silicon Valley investment bank, confirms that Citi is representing China.
Word that China, a state that actively combats privacy online, wants to buy a big stake in Facebook is bound to provoke some concern amongst the 700 million or so people who trust the site with their photos and online activity.
There's little need for such concern. First, even a billion dollar stake isn't a very big stake in Facebook, these days. The company is expected to IPO at a $100 billion valuation. Second, China would be buying non-voting stock and would have no say in Facebok's operations. And finally, it's not like shareholders in Facebook have some special privilege that allows them to see what users are doing or saying.
Importantly, sovereign wealth funds are pretty distinct from their governments.
Because it's a private company, Facebook will've to approve any sale of its stock to China. It's been reported that Mark Zuckerberg would like Facebook to move into China.
Representatives from Facebook and Citibank declined to comment on this story. We reached out to China's investment group, but haven't heard back.
Zuckerberg visited China in December and is scheduled to return, perhaps in September, in his bid to access the world’s largest online community, 457 million at last count.
"One big reason American firms stumble in China is that the government tends to favor locals when it comes to regulation," Business Insider points out. "One way to make sure that doesn't happen is to allow the government to own a stake."
Chief Operating Officer Sheryl Sandberg is reportedly "wary about the compromises Facebook would have to make to do business there." If she loses her argument with Zuckerberg and Facebook enters China, the company will eventually be subject to demands to censor its sites, those both inside and outside China. That's apparently why the Chinese want to own a big stake in Facebook. They're, in short, looking for control in the long run.
[Via: Business Insider]