14 DAY TRIAL // Facebook finally confirmed the massive round of funding that has been the focus of much speculation and analysis for the past weeks. Facebook said it raised $500 million from Goldman Sachs and DST directly and an additional $1 billion from Goldman Sachs clients. The company also announced plans for an initial public offer next year.
"Goldman Sachs completed an oversubscribed offering to its non-U.S. clients in a fund that invested $1 billion in Facebook Class A common stock," Facebook said in a statement.
"In December, Digital Sky Technologies (DST), The Goldman Sachs Group, Inc., and funds managed by Goldman Sachs invested $500 million in Facebook Class A common stock at the same valuation," it added.
The details of the deal had been mostly known. DST and Goldman Sachs invested $500 million in the company at a $50 billion valuation. While Facebook hasn't confirmed this, DST is said to have provided $50 million and Goldman Sachs the rest.
The bank also created a "special purpose vehicle" for some of its clients enabling them to invest, indirectly, in Facebook. There were some strict requirements and the bank eventually restricted it to clients outside of the US to attract less attention from the regulators.
Facebook had the option to accept between $375 million and $1.5 billion from Goldman and finally decided to limit it to just $1 billion.
Facebook says it has no clear plans for the $1.5 billion it just raised. In total, the company has raised $2.336 billion in funding to date.
US laws and regulations state that a company with over 500 investors has to reveal certain financial details each quarter. This requirement means that most companies choose to go public when they get close to that number of investors.
With Goldman Sachs pooling money from a large number of clients there was a question of the bank simply bypassing regulations by acting as the sole investor on account of its clients.
Facebook has now cleared this by saying that it was already on track to have more than 500 investors this year so it will be filing for an IPO no later than April 30, 2012. Facebook specifically only said it would be disclosing financial records, but an IPO is highly likely.