Updated with correction
The venture capital portfolios of the University of Michigan Board of Regents, Oregon Public Employees Retirement Fund and California State Teachers' Retirement System are among the investors that stand to gain when Facebook goes public.
The $7.7 billion Ann Arbor-based Michigan endowment is an investor in several of the venture capital funds that can claim Facebook as a portfolio company, according to board documents. In November 2010, University of Michigan committed $15 million to Andreessen Horowitz Fund II LP. Marc L. Andreessen, a technology veteran and angel investor who is co-founder of Andreessen Horowitz, is also a Facebook director.
The Andreessen Horowitz fund owns 3,571,431 shares of Class B common stock in Facebook, according to documents filed by Facebook with the Securities and Exchange Commission. Mr. Andreessen does not own any Facebook stock personally, according to the filing.
University of Michigan is also an investor in several funds of venture capital firm Accel Partners, which is the second-largest owner of Facebook shares — 201.38 million Class B shares — after Facebook founder Mark Zuckerberg.
Accel owns 11.4% of Facebook; Mr. Zuckerberg owns 533.8 million shares, which equals 28.4% of the currently outstanding shares. However, together with proxies granted him by many of his investors, including venture capital firms, Mr. Zuckerberg controls 57.1% of the voting rights and will continue to hold a majority of the voting rights after Facebook goes public.
Among its Accel Partners' investments, University of Michigan committed $5 million to Accel Partners IX LP in 2005. The Accel IX fund alone holds 149.53 million shares of Class B common stock, more than half of Accel Partners' Facebook holdings.
James W. Breyer, partner at Accel, is a member of Facebook's board of directors.
Rafael E. Castilla, director of risk management in the university's investment office, could not be reached for comment.
Also on the Facebook board is Peter A. Thiel, partner at venture capital firm Founders Fund. Mr. Thiel either directly owns or controls — as an executive of firms that own part of Facebook — 44.72 million shares. Founders Fund LP owns 5.98 million shares of Class B common stock; Founders Fund II LP owns 740,960 shares; Founders Fund II Principals Fund LP, 36,640 shares; and Founders Fund II Entrepreneurs Fund LP, 22,400 shares.
“Facebook has extraordinary business economics. For those fortunate to have invested in Facebook as a private company, it could be the investment of their lifetime,” said David Fann, president and CEO of La Jolla, Calif.-based private equity consulting firm TorreyCove Capital Partners LLC.
Other large investors in Facebook include DST Global Ltd., a Russian firm that owns 36.71 million Class A shares or 31.4% and 94.57 million Class B shares or 5.4%. T. Rowe Price Associates Inc. and Goldman Sachs Group Inc and some of their funds together own less than 1% of Facebook Class B shares.
Venture capital firms Elevation Partners, Felarmon Group Ltd., Greylock Partners, Technology Crossover Ventures, Valiant Capital Opportunities LLC and Meritech Capital Partners also have ownership interests in Facebook. However, the SEC document does not reveal the sizes of their ownership stakes.
Oregon Investment Council, which manages the $57.3 billion Oregon Public Employees Retirement Fund, Salem, committed $100 million to Elevation Partners' first fund. The firm's co-founder, U2 lead singer Bono, met with investment staff in 2005.
When asked how Facebook will impact Oregon's portfolio, Mike Mueller, the system's interim chief investment officer, simply wrote in an e-mail: “It will help.”
Nicki Dugan, spokeswoman for Andreessen Horowitz, said company executives could not comment because Facebook is in a quiet period.