The New York Times reported yesterday that Facebook has raised $500 million in new venture capital — the majority of it ($450 million) from Goldman Sachs — in a deal that values the social networking site at $50 million and has set "tongues wagging from Wall Street to Silicon Valley." What does the bank's Facebook friend-ing mean?
An IPO is unlikely: "Assuming regulators don't force the issue, Facebook could settle in as a permanent IPO holdout," says Shira Ovide in The Wall Street Journal. With an "eager queue" of private investors and plenty of opportunity for early investors to cash out, Facebook has no real motivation to go public. If Zuckerberg is "patient and doesn't mind being a billionaire only on paper, the long line of investors throwing money at him can keep the machine churning — privately — for a long time."
"Facebook IPO: Could Zuckerberg be a permanent holdout?"
No, Goldman is planning on taking Facebook public...: Goldman Sachs "has probably bought itself the IPO mandate, which could easily generate hundreds of millions of dollars in fee income," says Felix Salmon in Reuters. Not only are there plenty of people interested in investing in Facebook, there are also early employees and venture capitalists who are opting to sell. It's "surely" within Goldman's abilities to "engineer an IPO valuation" above $50 billion and "exit quietly in the public markets."
"Goldman's Facebook coup"
...and getting cozy with Facebook bigwigs: Not only is Goldman "the leading candidate to win the very lucrative and prestigious assignment of Facebook's initial public offering," says Peter Lattman in The New York Times, it's also primed to offer its private wealth-management clients a pre-IPO stake in Facebook and possibly to manage the massive wealth, on paper, of Mark Zuckerberg and other top Facebook execs. From Goldman's previous handling of the IPOs for eBay and Ralph Lauren, and subsequent handling of Meg Whitman's and Ralph Lauren's fortunes, respectively, "there is plenty of precedent here."
"Why Facebook is such a crucial friend for Goldman"