Home > Business & Strategy, Marketing Communcations & CRM > Facebook valued at $50bn after $500m investment

Facebook valued at $50bn after $500m investment

Goldman Sachs, Digital Sky Technologies plough cash into social networking site, boosting its value fivefold compared with mid-2009.

A fresh injection of investment into Facebook means the social networking giant’s valuation now stands at a massive $50 billion, according to global press reports over the past few days.

2011 dawned with the news that Goldman Sachs and Russian investment firm Digital Sky Technologies have invested a total of $500 million into Facebook. Unnamed sources involved in the deal, which was first reported by the New York Times, claim the sum has pushed Facebook’s value to that $50 billion mark.

The U.S. newspaper claims that $450 million of the funding came from Goldman Sachs with Digital Sky Technologies providing the remainder, although the Financial Times later reported that the split was £375 million to $125 million, weighted in Goldman Sachs’ favour. The second set of numbers tallies with the NYT’s assertion that Goldman Sachs has the right to sell up to $75 million of its stake to Digital Sky Technologies.

All parties involved have declined to comment on the transaction, which is not subject to public disclosure requirements since Facebook is not – yet – a publicly listed company. Many industry watchers predict a Facebook IPO will take place next year, although in November founder and CEO Mike Zuckerberg warned delegates at the Web 2.0 Summit: “Don’t hold your breath.”

Indeed, this latest round of funding provides Facebook with the cash to fund ongoing expansion without it having to adhere to the regulatory regime that public listing would bring.

Goldman Sachs will encourage further investment in Facebook. According to the New York Times, the firm will raise $1.5 billion for the social networking site and has already sent an email to some of its top private clients offering them the opportunity to invest in “a private company that is considering a transaction to raise additional capital.” The paper’s sources say any investors that take up the offer will be required to plough in at least £2 million and will be barred from selling any shares they acquire until 2013.

Facebook’s new valuation is five times that attributed to it when Digital Sky Technologies first invested in mid-2009. The Russian company parted with $200 million for a 1.96% equity stake, valuing Facebook at $10 billion. At the time the FT reported that that sum was lower than the $15 billion valuation based on Microsoft’s investment of $240 million 18 months previously, although the paper quoted Zuckerberg as admitting that Microsoft had bought in at the peak of the market.

Facebook says it has more than 500 million active users worldwide spending a combined 700 billion a minutes a month on the site. Its user base has risen from the 350 million-plus it reported in December 2009.

Originally posted at: http://www.totaltele.com/view.aspx?ID=461323&G=5&C=5&Page=0

  1. January 12, 2011 at 4:41 PM

    Very nice article and thanks for the useful information.

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