T. Rowe Price Invests in Facebook

Mutual-fund company T. Rowe Price Group Inc. has invested in Facebook Inc., according to recently released filings, underscoring traditional investment vehicles’ growing interest in hot technology companies.

T. Rowe invested a total of $190.5 million in the social-networking giant, paying $25 a share for stock it distributed across nearly 20 funds, according to the filings. It isn’t immediately clear what value that puts on Facebook.

The Baltimore-based mutual-fund company also disclosed an investment of $71.8 million in Zynga Inc. and a total stake of about $35.4 million in Angie’s List.

T. Rowe has been more aggressive than most of its mutual-fund peers in building exposure to young technology companies. The investments carry extra risk, because the shares aren’t yet publicly traded and can be illiquid. Meanwhile, a rush of interest in the companies has pumped up the companies’ valuations, even as they disclose little or no financial data.

T. Rowe Price has invested millions in Facebook, underscoring traditional investment vehicles’ growing interest in hot technology companies. Mary Pilon joins digits to discuss.
The investments, however, are a drop in the bucket for T. Rowe, which is trying to manage that risk by keeping the investments to a small percentage of each fund’s holdings. None of the funds has even a full percent of its holdings tied up in Facebook, for example. T. Rowe had $482 billion in assets under management as of the end of 2010.

Investors have been scrambling for a stake in Facebook, which is just seven years old and doesn’t publicly report its financial results. In January, Facebook was valued at $50 billion in a deal that raised $1.5 billion from investors such as Goldman Sachs Group Inc. and Russian investment firm Digital Sky Technologies, as well as some of Goldman’s non-U.S. clients.T. Rowe has long taken aim at new companies. Its New Horizons Fund, which doesn’t currently have a stake in Facebook but has invested in companies like Twitter Inc. and Angie’s List, is the third-oldest fund at the firm. Born in 1960, the fund is known for making longer-term investments in companies at their early stages, including early investments in Starbucks Corp. and Wal-Mart Stores Inc. Other T. Rowe funds were early investors in Google Inc. The fund has had a return of 34.67% in the 2010 calendar year, according to Morningstar Inc.

Recent trades on markets that allow investors to buy and sell shares in private companies have put a market value of around $75 billion on the company.

The Facebook investment complements other tech holdings at the firm, including a 2009 stake in Twitter and an investment in Groupon Inc. made late last year. In 2007, T. Rowe made an initial investment in Ning and in 2010 invested in YouKu.com.

Among the T. Rowe funds now invested in Facebook are the Science & Technology Fund, New America Growth Fund, Media & Telecommunications Fund, as well as broader funds including the Balanced Fund, Global Stock Fund and the Blue Chip Growth Fund. T. Rowe’s funds now have a total investment of $86.8 million in Groupon, $66.6 million in Twitter and $114.7 million in YouKu.com, according to the filings.

T. Rowe declined to comment on how the Facebook shares were purchased. A Facebook spokesman declined to comment.

Geoffrey Fowler contributed to this article.

Corrections & Amplifications

An earlier version of this online article incorrectly said T. Rowe Price invested $55.4 million in Facebook and $22 million in Angie’s List. The firm invested $190.5 million and $35.4 million, respectively, in the two companies.