The secret winner in Twitter share offer

Little-known financier Suhail Rizvi leverages on his social network to quietly amass a stake of more than 15 per cent in the microblogging site

PUBLISHED : Monday, 07 October, 2013, 12:00am
UPDATED : Monday, 07 October, 2013, 6:16am

When Twitter goes public in coming weeks, one of the biggest winners will be a 47-year-old financier who guards his secrecy so zealously that he employs a person to take down his Wikipedia entry and scrub his picture from the internet.

Over the past two years, Suhail Rizvi, founder of New York private equity firm Rizvi Traverse Management, has quietly amassed a stake of more than 15 per cent in the microblogging phenomenon for himself and his investors at a cost of more than US$1 billion, according to three people with knowledge of his investments.

While Rizvi was known to be an investor in Twitter, the extent of his involvement had not previously been reported.

Twitter made its listing registration documents public late on Thursday, setting the stage for the most closely watched initial public offering since Facebook's in 2012. Rizvi Traverse is listed as one of the institutional shareholders with at least a 5 per cent ownership stake, but no further details were disclosed.

The shares Rizvi bought were distributed among investors through multiple vehicles, sources said, and the size of his personal stake was not known.

People with direct knowledge of his investment activities said Rizvi, backed by Chris Sacca, a former Google executive and Twitter investor, was instrumental in attracting large private investors to the microblogging site, serving as matchmaker between the company's founders and global financiers.

Rizvi declined to comment for this article. Sacca, a longtime friend, gave him an entry into technology investing in 2011, when Twitter was still struggling to make money. From there, Rizvi scored stakes in some of the most sought-after internet startups, from Facebook before it went public to Square and Flipboard.

Rizvi's string of technology deals came amid intense competition among hedge funds and private equity investors to secure shares in startups, highlighted by Russian billionaire Yuri Milner's 2009 investment in Facebook.

With technology firms waiting later than ever to go public, some investors believed they might miss out on the biggest gains if they waited to buy shares in public markets, when a company's value may no longer rise exponentially.

The son of an Iowa psychology professor, Rizvi has networked with rich and powerful people including Queen Noor of Jordan and Google's Larry Page and Eric Schmidt, devising financing schemes that leveraged his access to deep-pocketed investors, according to people who know Rizvi.

Those who invest with Rizvi include British billionaire Richard Branson and Jeffrey Skoll, the former eBay executive and film producer, according to people with knowledge of the matter. It is not clear whether they are among the investors he brought into Twitter.

Before turning his attention to the internet, Rizvi's deal-making focused on Hollywood. He helped Hugh Hefner take Playboy Enterprises private; bought and then sold the Hollywood film studio behind the Twilight series; and led the buyout of a leading talent agency, International Creative Management (ICM).

Rizvi is not alone among entertainment investors who have turned their focus to Silicon Valley. But few have operated on the scale of Rizvi.

"He's not to be underestimated. His approach to traditional media as well as technology has put him in a great position," said Jeremy Zimmer, chief executive of United Talent Agency, a competitor of ICM. "His ICM investment was viable and gave him a seat at the table and a chance to make a sound investment in Twitter."

Rizvi's Twitter connections opened the doors to other investing opportunities. Last year, he led a US$200 million investment in Square, the mobile-payment processing company founded by Twitter co-founder Jack Dorsey, at a US$3.25 billion valuation. On September 24, he led a US$50 million financing round for news reader app Flipboard, whose founder, Mike McCue, once sat on Twitter's board.

But he has not always got his way in Silicon Valley. Although Rizvi indirectly owns some shares of Pinterest, he failed to buy a significant stake when the online scrapboard site raised US$100 million in 2012 and US$200 million this year.

It also remains unclear whether Rizvi's internet investments other than Twitter will pan out. Some industry insiders note that he missed out on the huge gains that were made with very early investments in social media, and companies including Square and Flipboard remain unproven. Rizvi was able to buy only US$100 million in Facebook shortly before its IPO, thus limiting his returns, according to people with knowledge of the matter.