Twitter has won a $300 million investment from Saudi Prince Alwaleed bin Talal as it pushes through a redesign of its site to attract advertisers.
Mr. Alwaleed agreed to buy a "strategic stake" with his investment company, Kingdom Holding, the company said today. Mr. Alwaleed is the largest individual investor in Citigroup and his other investments include holdings in Apple and General Motors.
Twitter is currently revamping its site to make it faster and simpler to navigate. The San Francisco-based company may boost ad revenue by 86% next year as it attracts more international advertisers, according to EMarketer. Mr. Alwaleed's investment comes as Facebook, the most-popular social-networking site, with more than 800 million users, is said to consider raising about $10 billion from an initial public offering.
"Twitter are looking to give themselves some more running space," said Jeff Mann, an analyst at Gartner in Amsterdam. "Their strategy has always been first get big; they're still holding reasonably close to that . Having a big audience is more important than a short-term revenue stream."
Twitter confirmed the investment in an email, declining to give additional comments. Demand for technology IPOs reignited in November after a summer lull, setting the stage for Groupon, Zynga (the largest maker of games for Facebook) and Angie's List Inc. to go public. Facebook may file for an IPO before the end of the year, a person with knowledge of the matter said last month. The sale may value the company at more than $100 billion, twice as high as it was in January, when the company announced a $1.5 billion investment from Goldman Sachs and other backers.
Mr. Alwaleed's investment may value Twitter at $10 billion, said Jack Neele, a fund manager at Robeco Groep NV, which had about $194 billion under management at the end of June. DST Global, the technology fund managed by Russian billionaire Yuri Milner and an investor in Facebook, led an $800 million financing round in Twitter in August. That investment valued the short-messaging service at $8 billion, people with knowledge of the plan said at the time.
"Twitter is seen as a strategic asset within the social-media space, given its large user base," Mr. Neele said. "But the business model in its current form isn't ready for the public market."
Twitter is seeking to speed up its ad rollout program, its main source of revenue. The microblogging service's revamp will feature tabs at the top of the screen that let users more easily access their home pages, connect with others and discover new content. EMarketer cut its estimate for 2011 ad revenue to $139.5 million from $150 million in September because Twitter has been slow to roll out some services.
Twitter is also facing the loss of two of its co-founders. Both Evan Williams and Biz Stone have lessened their involvement under CEO Dick Costolo, who took the reins in October 2010. Mike Abbott, a VP in charge of engineering, has also stepped down.
The agreement followed "several months of negotiations," Kingdom Holding said in its statement. "Kingdom realizes the importance of social networks like Twitter and their future growth prospects, and decided to benefit from this trend," said Samer Darwiche, an analyst at Gulfmena Investments in Dubai.
Prince Alwaleed, a nephew of Saudi Arabia's King Abdullah, was ranked the richest Arab businessman this year by Arabian Business magazine, with assets valued at $21.3 billion. Kingdom Holding, 95% owned by the prince, is building the tallest tower in the world in Jeddah at a cost of 4.6 billion riyals ($1.23 billion).
Mr. Alaweed "is a savvy investor, and the hot thing in the I.T. world is social networking," said Nabil Farhat, a partner at Abu Dhabi-based Al Fajer Securities in Abu Dhabi, United Arab Emirates.