Goldman deal values Facebook at $50bn

Tuesday 04 January 2011 11.17
Facebook - Deal values website at $50bn
Facebook - Deal values website at $50bn

Facebook has raised $500m from US investment bank Goldman Sachs and a Russian firm in a deal that values the social-networking website at $50bn.

The investment makes Facebook worth more than fellow Internet companies eBay and Yahoo!, as well as media company Time Warner, the newspaper said, citing sources familiar with the deal.

‘The stake by Goldman Sachs, considered one of Wall Street's savviest investors, signals the increasing might of Facebook, which has already been bearing down on giants like Google,’ the New York Times said.

Under the terms of the deal, Goldman has invested $450m, and Digital Sky Technologies, a Russian investment firm that has already sunk about half a billion dollars into Facebook, invested $50m.

The new money provides the privately held social-networking giant founded by Mark Zuckerberg more firepower to develop new resources, make acquisitions and lure away top employees as it increasingly competes more directly with Internet search giant Google.

Goldman has the right to sell part of its stake, up to $75 million dollars, to the Russian firm.

For Digital Sky Technologies, the new investment means its original investment in Facebook, at a valuation of 10 billion dollars, has climbed fivefold.

‘As part of the deal, Goldman is expected to raise as much as $1.5bn from investors for Facebook at the $50bn valuation, people involved in the discussions said, speaking on the condition of anonymity because the transaction was not supposed to be made public until the fund-raising had been completed.'

Representatives for Facebook, Goldman and Digital Sky Technologies all declined to comment.

Facebook surpassed Google, the world's Internet search leader, in 2010 as the most-visited website in the United States, Internet research firm Experian Hitwise said last week.

The social-networking giant has more than 500 million active users per month in the world, and according to comScore attracted 647.5 million unique visits in November, a jump of 48% from a year ago.

The new investment deal may double the personal fortune of Mr Zuckerberg, the Times said. According to Forbes, Mr Zuckerberg was worth $6.9bn when Facebook was valued at $23bn.