Facebook has raised $500m from Goldman Sachs and Russian investment firm Digital Sky Technologies, in a deal that values the social networking company at $50bn, according to reports.
Citing a ‘person familiar with the matter’, The New York Times reports that the US bank and Digital Sky Technologies plan to raise at least $1 billion in additional funding for Facebook.
The funding underscores the high hopes investors have riding on the new breed of private web companies, but follows the start of a probe by US regulator the Securities and Exchange Commission into the trading of shares in private companies such as Facebook and Zynga.
By raising money from private investors, Facebook can reap many of the benefits that traditionally require undertaking an initial public offering without facing the added scrutiny of the public markets, said Jeremy Liew, managing director at venture capital firm Lightspeed Venture Partners, which is not a Facebook investor.
Goldman is planning to create a special purpose vehicle to allow its high-net worth clients to invest in Facebook, the paper reported.
It has the right to sell a part of its stake, up to USD 75m, to Digital Sky Technologies, the paper said.
Facebook arranged for DST to buy at least $100 million of common shares from its employees in the summer of 2009, following a separate investment in which DST bought $200 million of Facebook preferred shares at a $10 billion valuation.
Facebook has said in the past it would not likely undertake an IPO until sometime after late 2012.
Facebook has shown little interest in floating shares until then, even as investors fight to get a piece of the company many believe could become the next Google, which it overtook as America’s most visited website last year.
The investment round, which was first reported by the New York Times, comes about a year and a half after Facebook raised USD 200m from DST, at a valuation of USD 10bn.
