Facebook Inc., the high-profile Silicon Valley start-up, looked far and wide before landing an investment this week from Digital Sky Technologies, and with it, indirect backing from controversial Russian tycoon Alisher Usmanov.
Facebook disclosed Tuesday it has received a $200 million investment from Moscow-based Digital Sky, valuing the closely-held, Palo Alto, Calif.-based company at roughly $10 billion. See story about Digital Sky's investment in Facebook.
Usmanov, listed by Forbes as the world's 450th-richest individual with a net worth estimated at $1.6 billion, is a significant stakeholder in Digital Sky.
Though he now receives most of his public attention as a result of his ownership stake in British soccer club Arsenal, Usmanov also owns stakes in iron ore and steel producer Metalloinvest, telecommunications company Megafon and daily business publication Kommersant.
Kommersant reported Tuesday that Usmanov raised his ownership in Digital Sky to 32% from 30%, by purchasing a portion of the stake owned by investment fund Renaissance Partners.
A representative of Renaissance Partners was not immediately available for comment, nor was a spokeswoman for Usmanov. But a Facebook spokesman said that Usmanov's stake in Digital Sky came up during the due diligence process, but wasn't considered a factor.
"With any type of significant deal, there is a lot of due diligence that takes place," spokesman Larry Yu said. "Assuming all goes well with that process, the deal will proceed."
In addition to interests acquired through his backing of Digital Sky, Usmanov, who was born in Uzbekistan, owns other Internet properties including a stake in SUP, which bought blogging service LiveJournal from Six Apart in 2007, and in online video service Newstube.ru.
Usmanov has attracted a great deal of media attention as a foreign owner of Arsenal, one of Britain's most high-profile soccer clubs. In addition, he's drawn widespread questions in the news media about his personal connections and his past.
In an interview with the Guardian published in November, 2007, Usmanov fielded questions about his six-year imprisonment at a penal colony in the 1980s, and about his relationship with Uzbek businessman and boxing official Gafur Rakhimov. Rakhimov was denied entry to Australia for the 2000 Olympics, and later reportedly won a defamation case against author Andrew Jennings, who had linked Rakhimov to organized crime in his book "The Great Olympic Swindle."
Usmanov called the fraud charges that led to his imprisonment false, and noted that a "rehabilitation order" from the Uzbekistan Supreme Court has since cleared him of any wrongdoing. He acknowledged in the interview that he knows Rakhimov, though only "since he was a neighbor of my parents." See Rakhimov's personal Web site.
Still, Usmanov continues to draw criticism. Former U.K. Ambassador to Uzbekistan Craig Murray, for example, has persisted in questioning Usmanov's character on his Web site.See Craig Murray's Web site.
In addition to its $200 million investment, Digital Sky has also agreed at a future date to purchase $100 million worth of current and former Facebook employees' shares in the company.
Facebook has long been seeking out a means to allow employees to cash in their shares, in hopes of rewarding and retaining them.
Digital Sky joins a roster of Facebook investors that includes Microsoft Corp.(MSFT 20.13, -0.21, -1.03%), hedge fund manager Peter Thiel and venture capital firm Accel Partners.
