The JPMorgan Digital Growth Fund is negotiating to buy a minority stake in Twitter, in a deal that could value the company at $4.5 billion.  News of the JPMorgan fund’s plans was first reported on Sunday by The Financial Times.

The investment would likely serve as the centerpiece of this $1.22 billion social media portfolio.  This deal follows Goldman Sachs's highly publicized $500,000 investment in Facebook, along with a commitment to raise an additional $1 billion from wealthy private individuals outside the United States.  It's unclear whether the Digital Growth Fund would invest directly in Twitter, or buy current investors’ stakes with the company’s consent.

Beyond Twitter, the Fund reportedly is expected to extend to other sectors of social media, with investments in companies like gaming giant Zynga and LivingSocial, providers of group coupons. JPMorgan plans to invest in companies with established business models and steady revenue before they go public in widely anticipated stock sales.

    Twitter Meteoric Rise.   Since its launch in 2006, Twitter has garnered tremendous attention and now is widely regarded as one of the darlings of the new generation of Internet companies.  Yet, its significant rise in valuation has coincided with the new-found strength in the equities markets.  In September 2009, the company was valued at $1 billion.  Two months ago, Twitter raised $200 million from a group of investors led by Kleiner Perkins Caufield & Byers which valued the company at $3.7 billion.  Recent trading of Twitter shares on SharesPost, a secondary market, set a $4.3 billion value.

For additional information, go to:   [NYT Dealbook, 2/27, "JPMorgan Fund .."]