Facebook has announced that it has raised $1.5 billion at a valuation of approximately $50 billion, but it is has no immediate plans for the funds and will simply continue to build and expand its operations. The transaction consisted of two parts: on Friday, Goldman Sachs completed an oversubscribed offering to its non-US clients in a fund that invested $1 billion in Facebook Class A common stock, while last month, Digital Sky Technologies (DST), The Goldman Sachs Group, and funds managed by Goldman Sachs invested $500 million in Facebook Class A common stock at the same valuation.
Facebook said it was approached by DST and Goldman Sachs; the company only then decided that the proposed deal was an attractive opportunity to bolster its cash reserves and increase its financial flexibility with limited dilution to existing shareholders. Facebook had the option to accept between $375 million and $1.5 billion from the Goldman Sachs overseas offering, but the company chose to limit it to $1 billion. Facebook expects to pass 500 shareholders at some point this year, and therefore predicts it will start filing public financial reports no later than April 30, 2012.
"Our business continues to perform well, and we are pleased to be able to bolster our cash position with this new financing, David Ebersman, Facebook's chief financial officer, said in a statement. "With this investment completed, we now have greater financial flexibility to explore whatever opportunities lie ahead."
The news that Goldman Sachs was investing in Facebook spread like wildfire last month, but we chose to cover it only now because Facebook has confirmed the deal and because a second, bigger investment was made. The social network was valued at $50 billion on the SecondMarket two months ago, but now it's official.