Goldman Sachs to Cash Out of Facebook - NBC Bay Area

The Silicon Valley giant launchces one of the biggest tech IPOs ever.

Goldman Sachs to Cash Out of Facebook

Goldman Sachs cashes in on Facebook stock sell-off pre-IPO.



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    Investment bank Goldman Sachs is ready to profit off of Facebook.

    They got in. And now they're cashing in.

    Goldman Sachs was an early investor in Facebook. And now with the technology company ready to go public, Goldman will be among the first to cash out, according to Bloomberg, ready to dump $1 billion in stock, or about half of the Wall Street investment bank's shares.

    The bank and its accompanying funds will sell 28.7 million of the 65.9 million shares they own -- more than twice the amount initially planned -- Facebook said yesterday in a filing.

    Goldman did so in a way that left both American shareholders and regulators out of the deal, Bloomberg reported: the company created a "special purpose vehicle" that allowed it to avoid U.S. Securities and Exchange Commission reporting requirements.

    And then Goldman -- which both handles its own investment accounts to make money for itself as well as for its private and institutional investors -- canceled an offering of Facebook shares to U.S. investors "amid concern that “intense media attention” may violate rules limiting marketing of private securities," Bloomberg reported.

    A spokesman for the bank declined to comment on the sale.

    Of the 14.2 million shares that Goldman owns for its own investment accounts, it is selling off 6.18 million, according to the Facebook filing. That means a $210 million to $235 million profit on the deal.

    For Facebook's overseas investors, whose shares are held by a Cayman Islands-based holding company, the payout is as much as $795 million, Bloomberg reported.

    Some investors see this as Goldman cashing out while Facebook is still overvalued: a Bloomberg poll conducted a year ago found that 69 percent of Wall Street investors and analysts deemed the-then $50 billion valuation as too high. At $35 to $38 a share, the valuation is now over double that.