Facebook is preparing to open its books this year or early in 2012 to give investors a glimpse into the financial workings of the world’s number one social network, after it sealed an oversubscribed $1,5 billion round of financing led by Goldman Sachs.
The financing, $1 billion of which is from Goldman Sachs’ overseas clients and $500 million from Goldman itself and Russian investment firm Digital Sky Technologies, gives the company a projected value of $50 billion, setting the stage for what could be one of the largest initial public offerings next year.
Facebook, founded in a Harvard dorm room in 2004, said it would begin to file public financial reports no later than April 30, 2012, in a statement detailing the new investment.
United States securities regulations require companies with more than 499 shareholders to disclose financial information whether they are publicly traded or not.
Facebook expects to exceed that number some time this year.
The new funding was organised by investment bank Goldman Sachs, which raised $1 billion from non-US investors in a fund that Facebook said was oversubscribed.
Goldman Sachs originally pitched the investment to US investors, but switched focus to overseas clients as concerns grew that intense media coverage surrounding the offering could run afoul of US securities laws.
Initial projections from Goldman Sachs in documents circulated to potential investors earlier this month indicated it was looking to raise up to $1,5 billion.
Facebook said it made a “business decision” to limit the offering to $1 billion, without explaining further. It said it had no immediate plans for using the money raised.
The company earned $355 million in net income in the first nine months of 2010 on revenue of $1,2 billion, according to a document distributed by Goldman Sachs to potential investors earlier this month, the only source of financial data on the company.
In December, Digital Sky Technologies, Goldman Sachs and some funds managed by Goldman invested $500 million in Facebook.
Facebook has more than 500 million users and is challenging big Web businesses like Google Inc and Yahoo Inc for users’ time online and for advertising dollars.
Investors are increasingly eager to buy shares of Facebook and other fast-growing Internet social networking companies on private exchanges.