Facebook looks to have closed its controversial $1.5 billion dollar private placement via an offering of Class A common stock to Goldman Sachs and Russian internet fund Digital Sky. Goldman in turn is set to resell a billion piece of the shares to overseas investors. GS had planned to sell some of those shares to its US clients but was forced to push the deal entirely offshore after intense public scrutiny of the deal raised concerns that the transaction would violate federal law which limits publicity surrounding private placements.
Two things stand out about the deal at this point:
1) the press release and news coverage make it clear this is new money into Facebook as opposed to a resale by insiders of existing shares. But since there is a $50 billion valuation placed on the deal it means that a lot of those existing shareholders are very happy campers this afternoon since they can resell their holdings in private transactions at a much higher valuation than might have been possible a year ago, or even three months ago.
2) the offering is of “Class A common” which suggests that Facebook has a multi-class capital structure in place. Google has a similar dual class capital structure. It allows Google to sell one class of shares to the public with relatively weak voting power and thus use the second class of shares to keep voting power in the hands of a small number of people, i.e., Brin, Page, Schmidt, etc.