Facebook Investor Milner Says His Stakes Are Alternative to IPO

Yuri Milner, the Russian financier famous for buying stakes in social media sites such as Facebook Inc. and Zynga Game Network Inc., said his investments often give companies an alternative to selling shares to the public.

“Some companies want privacy for the next few years and we’ve been playing the alternative by taking 10 percent off the table,” Milner said in an interview last night at a media conference in Monaco.

Milner’s Digital Sky Technologies bought 2 percent of Facebook for $200 million in 2009 and he said he has increased the stake to less than 10 percent since then. Last year, he spent $180 million for a stake in online games maker Zynga, and in April took the majority of a $135 million financing round for Groupon Inc., a Chicago-based site offering coupons for restaurants and museums.

The former physicist is still seeking to invest a minimum of about $100 million in companies active in the social space, focusing on China, Russian, South Korea and Japan. His other company, Mail.ru Group Ltd., for which he serves as chairman, raised $1 billion in what he said was Europe’s largest public offering of an Internet business.

Born in Moscow, Milner studied at Wharton Business School in the U.S. and worked for the World Bank before returning to Russia. His first investment 10 years ago was for less than $1 million, he said.

When he met Mark Zuckerberg, Milner said the Facebook founder wasn’t wearing socks or a tie and was curious about Russian social networking.

‘Very Lucky’

“I’d been following the company for a long time and I knew I wanted to invest at that point,” Milner said. “The company was growing 1 percent every day without advertising.”

Today, Facebook boasts more than 500 million users and is the most visited U.S. website. Milner said he paid more for Facebook than most companies were willing to at that time. “If you have one investment like this in your life you’re very lucky.”

He declined to comment on recent speculation that he would invest in social site Twitter Inc. He said his company would continue to focus on making late-stage investments.

To contact the reporter on this story: Kristen Schweizer in London at kschweizer1@bloomberg.net.

To contact the editor responsible for this story: Vidya Root at vroot@bloomberg.net