SOCIAL NETWORKING website Bebo, which has about one million active users in Ireland, was sold yesterday to the Time Warner subsidiary AOL for $850 million (€545 million) in cash, writes Ciaran Hancock, Business Affairs Correspondent.
Venture capital group Balderton Capital will net $140 million from the sale of its 15.7 per cent stake in Bebo. Balderton was represented on the board of Bebo by Irishman Barry Maloney.
Balderton invested $15 million in Bebo in May 2006. The sale has earned it more than nine times its original investment in less than two years.
"We're delighted to get it done," Mr Maloney told The Irish Times. "It was a pretty quick exit for us so we're delighted with the result."
He said the windfall would be returned to the investors in the Balderton fund that invested in Bebo.
The sale of Bebo is the latest in a long list of major deals involving social networking websites. News Corp, which is controlled by Rupert Murdoch, paid $580 million for MySpace in 2005.
Microsoft, meanwhile, took a 1.6 per cent stake in Facebook for $240 million last year.
The AOL deal will net Bebo founders Michael and Xochi Birch a significant windfall.
They founded Bebo in July 2005 and have developed the business into one of the largest social networking sites in the world. They will continue to have an involvement with the business.
Bebo employs just 100 people at offices in the UK, San Francisco (where its head office is located) and Texas.
Joanna Shields, Bebo's president, will continue to run the company after the deal has been completed - this is expected to take about 30 days.
Bebo has global membership of more than 40 million people, with 11.4 million of those in the UK. Users spend an average of 33 minutes per session on the website.
It is one of the top social networks in Britain and the market leader in Ireland and New Zealand, but it has yet to crack the US market where MySpace and Facebook are the top two social networking websites.
Mr Maloney said he took the decision to invest in Bebo having seen his three teenage daughters actively use the website.
"I saw how focused they were when they started to become Bebo users," he said. "I don't think I would have looked at it otherwise." Mr Maloney said he never used the website himself. "I promised them [ my daughters] not to have my own website and stuck to that promise."
The Bebo stake was held by Balderton's second fund, which has invested about $375 million in a range of companies.
Balderton's other investments include Irish pay television broadcaster Setanta Sports and Payzone, the Dublin-based electronic payments and ATM company.
The purchase of Bebo comes at a time when AOL is transforming itself from a dial-up internet provider to an online advertising house. Reports have suggested that its parent company Time Warner might spin off AOL.
