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It’s My Own Private IPO.
Two days after announcing a private investment placement that values Facebook at $50 billion, Goldman Sachs’ controversial fund is already oversubscribed, The Wall Street Journal reported late
That strong response from Goldman’s wealthy clients appears to have far exceeded the $1.5 billion the bank had planned to raise, and leaves absolutely no doubt that the appetite for a piece of the world’s largest social network — still a private company that outsiders can only speculate brings in a reported $2 billion a year — is voracious.
“It’s a blowout,” The Journal quoted one Goldman employee as telling an investor.
Goldman Sachs has proposed a so-called “special-purpose vehicle” that would allow its high-net-worth clients to invest in Facebook.
The SEC has launched an inquiry into whether the deal is designed to avoid rules aimed at protecting investors. The structure of Goldman’s fund would appear to avoid triggering federal rules that require companies with more than 500-shareholders and $10 million in assets to file quarterly and annual reports with the SEC.
Some experts have observed that the fund appears to allow Goldman Sachs and Facebook to avoid SEC disclosure rules, and allow Facebook to remain private for as long as possible, but still make it easy for Goldman’s rich clients to invest in the company.
The report contains some new details about the nature of Goldman’s fund. For example, Goldman is expected to take fees of 4 percent up-front, and then 5 percent of any gains, the paper reported. So for example, if the fund were increased to $3 billion to accommodate the heavy demand from Goldman’s clients, the bank would pull in $120 million at the outset, just for being, well, Goldman Sachs.
Fund participants must lock in their investments for two years, until 2013. Facebook is widely expected to file for an initial public offering, underwritten by none other than Goldman Sachs, in which it well sell shares to the general public, probably in 2012.
If the IPO performed well, as it is expected to do, Goldman’s clients stand to profit handsomely. The bank, of course, would reap more fees from any gains as well as the IPO itself.
Follow us for disruptive tech news: Sam Gustin and Epicenter on Twitter.
See Also:
- Goldman Infusion Values Facebook at $50 Billion, Virtually Assures …
- Goldman-Facebook Deal Draws SEC Scrutiny of Startup Investing …
Authors: Sam Gustin
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