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Facebook raises $1.5 billion, valued at $50 billion

On Friday 21 January 2011, 23:11 EST

Facebook announced Friday that it had raised $1.5 billion from investors in a private share offering that valued the booming social network at approximately $50 billion.

"Our business continues to perform well, and we are pleased to be able to bolster our cash position with this new financing," Facebook chief financial officer David Ebersman said in a statement.

"With this investment completed, we now have greater financial flexibility to explore whatever opportunities lie ahead."

Facebook said US investment bank Goldman Sachs completed an oversubscribed offering to its non-US clients in a fund that invested $1 billion in Facebook Class A common stock.

Russia's Digital Sky Technologies, The Goldman Sachs Group, Inc., and funds managed by Goldman Sachs meanwhile invested $500 million in Facebook Class A common stock at the same $50 billion valuation.

Facebook also said it expected to surpass the ceiling of 500 shareholders sometime this year and would start filing public financial reports no later than April 30, 2012.

US Securities and Exchange Commission (SEC) rules require firms with 500 or more shareholders of record in a given type of stock to publicly disclose certain financial information.

Facebook, the world's top social network with nearly 600 million members, said it had "no immediate plans" for the newly raised funds, indicating it "will continue investing to build and expand its operations."

Earlier this week, Goldman Sachs, citing "intense media coverage," said it was excluding US clients from the private offering of shares in Facebook.

"Goldman Sachs concluded that the level of media attention might not be consistent with the proper completion of a US private placement under US law," it said.

US securities law bars public promotion of private offerings and the Facebook deal reportedly attracted the SEC's attention.

Facebook has been in the spotlight since US media revealed earlier this month that Goldman had invested $450 million in the company, alongside a $50 million investment by Digital Sky Technologies.

With this fresh investment, Facebook has a bigger valuation than companies like Boeing or Time Warner.

Yet its annual revenue, primarily based on advertising, is estimated at $2 billion, compared with Boeing's $64.62 billion and Time Warner's $26.5 billion.

Facebook co-founder Mark Zuckerberg has so far resisted pressure to launch an initial public offering of stock in the Palo Alto, California-based company. The 26-year-old was recently named Time magazine's "Person of the Year."