Facebook has raised $1.5bn at a valuation of about $50bn, including a private placement by investment bank Goldman Sachs of two-thirds of the amount to its non-American clients.
Goldman Sachs said it completed an oversubscribed offering to its non-US clients in a fund that invested $1bn in Facebook class A common stock. However, pressure from US regulator Securities and Exchange Commission led Goldman Sachs to limit its placement to overseas investors as local rules prevent private placements to more than 499 local investors, and Facebook it would now publish its results publicly from April next year.
Last month, Digital Sky Technologies (DST), a Russia-based internet holding group backed by Goldman Sachs and South Africa-based media group Naspers’ corporate venturing unit, and the US investment bank invested $500m in Facebook’s A shares at the same valuation.
David Ebersman, Facebook’s chief financial officer, said: "Our business continues to perform well, and we are pleased to be able to bolster our cash position with this new financing.
"With this investment completed, we now have greater financial flexibility to explore whatever opportunities lie ahead."
In a questions and answers session on its website, Facebook said:
Why did Facebook raise this money?
DST and Goldman Sachs approached Facebook to express their interest in making an investment, and Facebook decided it was an attractive opportunity to bolster its cash reserves and increase its financial flexibility with limited dilution to existing shareholders.
Why did Facebook choose to raise $1bn in the overseas offering?
Under the transaction’s terms, Facebook had the option to accept between $375m and $1.5bn from the Goldman Sachs overseas offering, at the discretion of Facebook. While the offering was oversubscribed, Facebook made a business decision to limit the offering to $1bn.
What are Facebook’s plans for the proceeds of this transaction?
There are no immediate plans for these funds. Facebook will continue investing to build and expand its operations.
Does this investment mean that Facebook will have more than 500 shareholders?
Even before the investment from Goldman Sachs, Facebook had expected to pass 500 shareholders at some point in 2011, and therefore expects to start filing public financial reports no later than April 30, 2012.
About Facebook:
Founded in February 2004, Facebook is a privately held company and is headquartered in Palo Alto, California.