What’s the Face Value?

Yup, Hong Kong billionaire Li Ka-Shing has invested another $40 million in Facebook, one of the hottest social networking sites in the world, after his initial $60 million investment last November, according to MarketWatch. By the way, the $60 million was for a 0.4% stake.

A total of $100 million for a stake of less than 1%. Kudos to Mark Zuckerberg, who co-founded Facebook about 4 years back as a social network meant exclusively for Harvard students. The community soon became a hit and gradually opened to the public.

When you were busy poking members of the opposite sex and throwing sheeps at your friends, the company was raking in millions of dollars. Facebook received an investment of $240 million in October last year from software giant Microsoft, which valued the Palo Alto, California-based company at approximately $15 billion. In terms of popularity, Facebook is already the second-largest community, after MySpace.

Although the latest comScore report says that Facebook has more than 100 million unique visitors per month, there’s no sign of steady revenues or sustainability of profitability. Why would the Hong Kong tycoon invest that much money into a site that doesn’t even have steady revenues? There are two possible reasons:

First, as Li commented himself, he may be looking at combining Hutchinson Whampoa’s 3G network with Facebook’s social network. Hutchinson Whampoa, chaired by Li, is a Hong Kong-based conglomerate with diverse businesses under its belt, ranging from port operators to high-tech telecom operators.

Li said, “Facebook is doing very well and we’d have some synergy between the 3G services of Hutchison and Facebook, so the customers could use Facebook on mobile phones.” Due to the high mobile penetration in China, if Facebook is made available on cell phones, the site could attract tens of millions of subscribers.

The second reason for the investment could be the potential IPO. I’m not totally convinced about this though. With concerns over a US slowdown rapidly giving way to fears of a recession, the IPO may be postponed to even 2010. Moreover, Facebook has already attracted close to $400 million in investments. This amount of cash could support the company as a private entity for quite a few years to come.

The valuation of $15 billion seems exorbitant. But who’ll argue a decision made by the “Superman of Hong Kong”? I’m fine with his decision as long as it doesn’t affect my superpoking activities on Facebook.