Of late, online social networking site Facebook received $1 billion from Goldman Sachs overseas offering; and Digital Sky Technologies (DST) and Goldman Sachs also made $500 million direct investment. While the recent total investment is U.S. $1.5 billion, the investment values Facebook at a whopping $50 billion.
But why Facebook – that claims to have nearly 600 million users on its site – needs this kind of money?
It said Friday in a statement that DST and Goldman Sachs approached Facebook to express their interest in making an investment, and Facebook decided it was an attractive opportunity to bolster its cash reserves and increase its financial flexibility with limited dilution to existing shareholders.
Under the transaction’s terms, Facebook had the option to accept between $375 million and $1.5 billion from the Goldman Sachs overseas offering, at the discretion of Facebook. While the offering was oversubscribed, Facebook made a business decision to limit the offering to $1 billion.
The company says there are no immediate plans for these funds. However, Facebook will continue investing to build and expand its operations.
Even before the investment from Goldman Sachs, Facebook says it had expected to pass 500 shareholders at some point in 2011, and therefore expects to start filing public financial reports no later than April 30, 2012.
Facebook is a privately held company and is headquartered in Palo Alto, Calif.
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