Demand for Facebook shares has reached such a frenzy among Goldman Sachs clientele that the bank reportedly plans an early end to soliciting interest from would-be buyers.
Several billion dollars worth of orders for the Facebook shares have already come in, according to several people the Wall Street Journal interviewed off the record. Goldman Sachs asked the social network several times whether the company would be willing to expand the size of the deal beyond the $1.5 billion planned for sale to the bank’s clients.
While Goldman’s requests to expand the size of the deal were informal, Facebook may decide whether to sell additional shares based on how much employees want to unload out of their current holdings, said an unnamed investor who’d talked to the Journal.
The intense demand is amazing considering that prospective buyers only received a fraction the data that usually accompanies an investment solicitation; on top of that, the disclosed fees are unusually large, amounting to four percent up front plus five percent of any gains.
Plus, the minimum purchase size for clients is $2 million, although Goldman partners are reportedly allowed to buy in with smaller amounts. The deal also requires the buyers to hold onto the shares until 2013, and that includes not selling the stock on any private marketplaces.
That buy-and-hold requirement suggests that the bank intends to do a Facebook initial public offer, although it could also have the intention of keeping the number of shareholders within limits dictated by the Securities and Exchanges Commission.
If you had the opportunity to buy shares of Facebook through a special purpose vehicle like the one Goldman Sachs is creating, would you purchase them at the current prices that value the company at $50 billion? Do you think the SEC will pressure Facebook to go public even sooner than previously thought?