Goldman to invest up to $1.5 billion in Facebook, let the pump begin

T

tmarket

"Goldman has invested $450 million in a deal that values Facebook at $50 billion. As part of the deal, Goldman is looking to raise as much as $1.5 billion from its wealthy clients to invest in Facebook alongside the firm.

....There is plenty of precedent here. ...

Then there is Meg Whitman and eBay, the online auction site. Goldman put the bear hug on eBay as it was becoming one of the hottest Internet companies during the dot-com boom of the late 1990s and handled its I.P.O. Goldman named Ms. Whitman to its board of directors, eBay has steered millions of dollars in fees to the firm and Goldman manages much of Ms. Whitman’s fortune. (Her close ties to Goldman hurt her during her gubernatorial campaign last year.)

Goldman surely hopes that things turn out much the same way with Facebook and Mr. Zuckerberg, a 26-year-old billionaire, as it did with Ford and Mr. Ford; and Ralph Lauren and Mr. Lauren; and eBay and Ms. Whitman."


http://dealbook.nytimes.com/2011/01/03/why-facebook-is-such-an-important-friend-for-goldman-sachs/
 
Facebook? What is the business model on this website? As far as I can tell, it is nothing more than an information gathering entity and serves no useful purpose other than to track individuals. I'll pass.
 
Quote from Larson:

Facebook? What is the business model on this website? As far as I can tell, it is nothing more than an information gathering entity. I think I'll pass on this one.
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facebook makes ridiculous $$$
 
Also from the article that is raising questions but of course will go unnoticed as the SEC looks the other way is how goldman plans on getting around the rule where companies with 499 investors or more need to disclose their financial results to the public. They are creating a "SPECIAL PURPOSE VEHICLE" that will be able to get around this rule where goldman will be considered to be just one investor as they rake in billions of investment dollars from thousands of clients.


Let take notice of what the SEC does about this!!!!
 
Quote from MarketMasher:
----Facebook stopped being cool....
----Another MySpace in the making.
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How will you keep in touch with high school classmates and former co-workers who you do not ever want to see again without those sites? :confused: :p
 
Here is the pump:
Special Goldman Sachs clients received a delightful email from their brokers on Sunday evening.

They have an opportunity to invest in an unnamed “private company that is considering a transaction to raise additional capital,” Dealbook reports.

Those lucky few now know that company is Facebook.

There's only a few catches.
You have to invest a minimum of $2 million.
If you do invest, you can't sell your shares until 2013.
If you trade in secondary markets where Facebook trades, you should probably sit this one out because if you do decide to buy in, you're going to be getting some juicy material non-public info on the company "that will restrict future trading."
In fact, even if you get that non-public data, and then decided not to invest, you'll have to wait at least half a year - maybe longer - before you could trade Facebook shares in the secondary market.

For those Goldman clients who think - Hey, I tick all those boxes! - and decide they want more information on the opportunity, they'll get another email in a few days with a "private placement memorandum" - aka an email confirming the opportunity does indeed mean a chance to buddy up with Mark Zuckerberg, plus more details on the special new vehicle the bank is creating so its wealthy clients can get involved."
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I heard it has 2B in sales. 50B valuation = Price to sales ratio of 25.

I am curious how badly the big firms fleece their clients with these deals? I would bet that any time you are given, "exclusive access" that strokes your ego on average you are about to get FLEECED.

I will stick with things I can analyse independently, thank you! (Though being in a position to have to reject those sales calls would be nice.)
 
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