A JPMorgan fund is in talks to acquire a substantial stake in Twitter, one of the fastest-growing social networking sites. The fund hopes to acquire 10% of the online messaging service for $450m, valuing Twitter at $4.5bn, according to people familiar with the plans.
The fund has raised $1.22bn to date, according to a filing with the Securities and Exchange Commission. But it plans to raise $1.3bn in total, and will have a maximum of 480 investors, say the people. JPMorgan expects to earn commission of at least $13m from the fund.
It's not clear whether the fund, known as the J.P. Morgan Digital Growth Fund, will invest directly in Twitter, or buy current investors' stakes with the company's consent, these people said. They cautioned that talks were continuing and might not lead to a deal. These people spoke on the condition of anonymity because the talks were intended to be private.
Spokesmen for JPMorgan and Twitter declined to comment on Sunday.
Besides the Twitter stake, JPMorgan hopes to invest another third of the fund in one other private web company -- possibly games maker Zynga or telephony provider Skype.
The final third of the fund will be allocated among six other companies, they said -- possibly to include coupons site LivingSocial, or Gilt, the flash-sales site. Twitter will be the fund's focus. The company has 253m unique users per month, up 85% from a year ago, according to venture capital firm Kleiner Perkins Caufield & Byers.