Goldman Sachs invested $450 million in Facebook, as part of a transaction that implies the social network has a valuation of around $50 billion.
Spokespeople for the social network declined to comment on this transaction as reported by The New York Times, which cited unnamed individuals involved in the transaction.
The deal’s implied value of Facebook makes it nearly 20 percent lower than the valuation the company attained in the last private-market auction. The stock had traded at $25 per share on SharesPost, for a total implied value of $59.4 billion last month.
In the most recent transaction, Goldman invested $450 million while the Russian investment firm Digital Sky Technologies bought $50 million, according to the Times. The deal includes a clause giving Goldman the right to sell up to $75 million of its stake to Digital Sky Technologies.
Digital Sky Technologies previously invested $200 million in Facebook during the late spring of 2009, implying a valuation of $10 billion for the company at the time. The latest transaction has effectively increased this stake fivefold, assuming the social network now has a valuation of $50 billion.
Nothing in the report on the newest transaction says whether Digital Sky’s latest purchase of $50 million in Facebook shares has anything to do with the Russian company’s previously plan to buy $100 million in stock of the company, as an addition to the 2009 investment.
All of that aside, Goldman Sachs joining the investors in Facebook makes a very strong statement about the social network’s prospect for continued growth and possible return on investment.
The Wall Street company’s involvement will likely increase speculation about whether Facebook might undergo pressure to have an initial public offering sooner than previously planned.
Readers, what significance do you attach to Goldman Sachs’ investment in Facebook?