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JPMorgan to Launch Social Media Fund

February 13, 2011

By Gilbert Falso :: 9:32 PM

Hoping to leverage investor interest about social networking companies like Facebook and Twitter,  JPMorgan Chase is planning to begin a new fund to invest in an variety of Internet and new media companies.

The proposed fund, which will be administered by JPMorgan’s asset-management group , is looking to raise between $500 million and $750 million from investors to put into privately held technology businesses like Twitter and Groupon.

Several social-media companies, including LinkedIn and Pandora, have already filed paperwork to go public. Those filings presage even more anticipated stock sales by Groupon and Facebook.

Interest in these types of companies has been running high recently. Groupon raised $950 million in financing from several  investment firms, after having turned down a $6 billion takeover offer by Google.

Ttrading in existing shares of these companies on private markets has been frenzied over the past several months, with Facebook valued at $53 billion on the secondary market SharesPost.

JPMorgan plans to buy and sell shares in these companies on behalf of their clients, and will not directly invest the firm’s own money.

Having a base of ready investors could give JPMorgan’s investment bank a competitive edge in gaining  business from the young technology firms. Analysts have long seen  retail customers as a more stable source of capital, compared to money that moves in and out of stocks owned by hedge funds and other institutional investors.

[From Dealbook]