Goldman Sachs Invests $450 Million In Facebook At $50 Billion Valuation

[Turborama]

Source: Business Insider

Huge news for Facebook: Goldman Sachs is investing $450 million in the company at a $50 billion valuation, the New York Times' Dealbook reports.

This as Facebook starts to threaten Google as the most important site on the Internet.

Goldman's investment comes alongside a new $50 million investment from existing Facebook investor DST, the Russian investment firm that has also invested in Groupon and Zynga. And Goldman has the right to sell up to $75 million of its stake to DST, the NYT's Andrew Ross Sorkin and Evelyn Rusli report. (They also point out that DST has made out amazingly on its initial investment in Facebook, around half a billion dollars at a $10 billion valuation.)

Also as part of the deal, Goldman will help raise up to another $1.5 billion for Facebook at that $50 billion valuation, according to the NYT.

Read more: http://www.businessinsider.com/goldman-sachs-invests-450-million-in-facebook-at-50-billion-valuation-2011-1

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The Dealbook piece: http://dealbook.nytimes.com/2011/01/02/goldman-invests-in-facebook-at-50-billion-valuation/">Goldman Invests in Facebook at $50 Billion Valuation

Follow up article from Dealbook: http://dealbook.nytimes.com/2011/01/03/why-facebook-is-such-an-important-friend-for-goldman-sachs/">Why Facebook Is Such an Important Friend for Goldman Sachs

And this from the New Yorker...

Facebook-Goldman: Where Is the S.E.C.?
Posted by John Cassidy

Happy New Year everybody. I’m working on a post about the economic prospects for 2011, but, first-up, a quick memo to Mary Schapiro, the head of the Securities and Exchange Commission: Mary, once again the boys and girls at Goldman Sachs appear to be making a mockery of you and your colleagues.

How else to describe the news from Dealbook that Goldman is setting up a special purpose vehicle to allow rich people to invest in Facebook? Under the securities laws, once a company has more than five hundred investors it is obliged to convert into a public company by issuing stock to investors at large. It is well known that Mark Zuckerberg, the founder of Facebook, doesn’t want the hassle of running a public company, not yet, at least, and Goldman’s latest wheeze seems to be designed to let him have his cake and eat it. If the deal goes ahead, Facebook will get up to two billion dollars of new capital to invest in its business but will, for the moment, remain a private company—of sorts.

As part of the deal, Goldman will reportedly invest $450 million in Facebook and Digital Sky Technologies, a Russian investment firm which already has a substantial stake in the social network platform, will invest another $50 million, but that is only stage one. In stage two, according to Dealbook, “Goldman is expected to raise as much as $1.5 billion from investors for Facebook at the $50 billion valuation, people involved in the discussions said.” The story goes on: “While the S.E.C. requires companies with more than 499 investors to disclose their financial results to the public, Goldman’s proposed special purpose vehicle may be able get around such a rule because it would be managed by Goldman and considered just one investor, even though it could conceivably be pooling investments from thousands of clients.”

Say one thing for Goldman: the firm has chutzpah. Just last July, there it was acting all contrite and paying $550 million to settle an S.E.C. suit that charged it with misleading investors in marketing some complex securities tied to sub-prime mortgages. Goldman failed to disclose that one of its biggest clients, John Paulson, the hedge fund manager, had helped to select the sub-prime loans underpinning the securities, and that he stood to gain handsomely if the securities fell in value, which they quickly did. Six months later and Goldman again appears to be trying to twist the securities laws for the benefit of itself and one of its clients—Facebook.
Maybe, there’s more to the story than this, but based on today’s reports it looks like Goldman is, once again, running rings around the regulators.

Over to you, Mary…

From: http://www.newyorker.com/online/blogs/johncassidy/2011/01/facebook-goldman-where-is-the-sec.html

[JustABozoOnThisBus]

1. When this bubble bursts, will Facebook be "too big to fail"?

I think the taxpayers would love to bail out Facebook AND Goldman Sachs.

I know I would.

If a sports stadium gets renamed "Facebook Field", then it's time for small investors to run like hell.

:hi:

[glinda]

2. Then comes the buyout by Murdoch.

[OregonBlue]

3. Time for all liberals to quit Facebook.

[kentauros]

4. I never joined.

But I am waiting for diaspora to get started :)

[OregonBlue]

14. I joined and quit after just a few weeks. I really don't want to "keep up with what

everyone I know (especially my family) is doing". Very time consuming and sorta teeny-boppery to me.

[JDPriestly]

5. This spells big, big, big, big trouble.

Yet another way to launder money and mine for information.

The names of the "investors" will not be revealed. The source of their money will not be disclosed. The"success" or "failure" (depending what the "investors" really mean by those terms) will never be known.

XXX number of dollars being "invested," far more than could ever be earned from the ads on Facebook, but everybody is happy. Goldman gets bonuses for "investing" huge amounts of money of an unknown source, possibly money first passed through Russian (or Mexican Mafia or Columbian rebels') hands. Facebook gets an injection of cash. Every fool in America launders his/her dirty underwear in public on the Facebook "social network." Lots of free, very personal data made available to whomever wishes to have it: "Look at Uncle Charlie shaving in the mirror last Saturday." "Pictures from our vacation in the Adirondacks. We spend three weeks there every summer." "Us at the office Christmas party. Doesn't Phyllis look smashed?"

Facebook puts your supermarket bonus card and your credit card company's summary of your charges to shame for simply placing the details of millions of people's personal lives at the fingertips of the enterprising who know how to turn such information into fun and profit.

And people are worried about Wikileaks?

Why are people so stupid?

[AlphaCentauri]

12. voyeurism at its best n/t

[AsahinaKimi]

6. I left FB when they had their own LEAKS...

Allowing people accidentally to see peoples personal information over the net, things like addresses and phone numbers, etc. That and all the stupid spam messages I was getting. I will keep my Twitter account, but FB is of no longer an interest.

[gratuitous]

7. Hey, you got $450 million sitting around

Why not sink it into an internet social network? No sense investing in anything, you know, that produces something, when you can invest in electrons lined up on a computer screen.

[hedgehog]

9. My thoughts exactly! What a waste it would have been to

use this $450 million to develop a smart electrical grid!

[L0oniX]

8. "the most important site on the Internet" LMFAO

[AlphaCentauri]

10. Report: Facebook deal values firm at $50 billion

Source: MSNBC

As if being named Time's Person of the Year wasn't enough, Facebook founder Mark Zuckerberg may now be worth an estimated $14 billion. Not bad for a 26-year-old.

The boost in Zuckerberg's fortune reportedly has come after news his social networking company has raised $500 million from Goldman Sachs and a Russian investment firm in a deal that values the company at $50 billion.

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..The New York Times reported Sunday in its online edition that Goldman invested $450 million and Digital Sky Technologies invested $50 million, citing people involved in the transaction that it did not name. Goldman has the right to sell part of its stake, up to $75 million, to the Russian firm.

The report said representatives for Facebook, Goldman and Digital Sky Technologies declined to comment.

The deal makes Facebook now worth more than companies including eBay, Yahoo and Time Warner, the newspaper said. It said the new money will give Facebook the financial firepower to hire new employees away from competitors, develop new products and perhaps gobble up other companies. all without being a publicly traded company.



Read more: http://www.msnbc.msn.com/id/40885536/ns/business-us_business

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Facebook was the wetdream of the KGB and Gestapo, no need to go door to door to make profiles of people they'll do it them selves.

[Arctic Dave]

11. Spot on about the secret police wet dream.

I have question to pose to people, do you really believe a 26 year old is controlling this company?

[Hestia]

13. Now that you mention it...hmmm, never thought about that, and I am sure a lot

of others haven't either. I do quibble about of "people" on FB too. My DH & I have friends who have set up multiple accounts, 10 or more. We are the only one's I know of that have only set up 1 account. (Which looks like it will be deleted very soon.) Which really means, that if we have fake friends, how many others are out there? What if real people are less than 50 million who use FB?

Could this be another pump & dump for Goldman? They've bled us dry every damned other place, what if they are trying to suck in the average person investments, then to find out that is all one big farce?