Facebook Raises $1 Billion

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Facebook has raised $1 billion from investors in a financing round led by Goldman Sachs Group Inc. The Wall Street Journal reports that the cash came from a private offering to Goldman’s non-U.S. clients, and that the total funding round includes $500 million from Goldman and Russian investment firm Digital Sky Technologies.

Although Goldman Sachs values the social networking giant at $50 billion, a report by financial research firm Trefis puts Facebook’s worth at $45 billion but maintains that key drivers such as an increase in ad revenues, page views and market share could lead to an even higher valuation of $100-plus billion for Facebook.

Earlier this year, DealBook revealed that Goldman clients received an unusual request in their inbox – an invitation to invest in Facebook, which industry observers say is likely to stage an initial public offering in 2012. According to DealBook, clients would have to invest a minimum of $2 million and would be prohibited from selling their shares until 2013.

However, in late January, intense media attention forced Goldman to close off the private placement offer to U.S. clients for fear of violating U.S. securities laws. As reported by TechZone360.com, Goldman Sachs had come up with an investment vehicle that would have allowed basically any of its wealthy clients to invest in Facebook. But the scheme was widely reported in the media after it was e-mailed to clients. Now, the only investors who can take part in the Facebook investment plan have to live outside of the United States – where U.S. government rules do not apply.

The emerging situation was called “a huge embarrassment” for the banking firm, by Business Insider, with the New York Times calling it a “serious embarrassment.”

Goldman Sachs ranked as the top global mergers and acquisitions advisor last year, ousting competitor Morgan Stanley from its stronghold, according to Thomson Reuters data released this week. Goldman advised on 370 deals worth $554.5 billion in 2010, compared with Morgan Stanley's 394 deals worth $538.1 billion.




Edited by Tammy Wolf
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TechZone360 Contributing Editor

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