Goldman's Top Unit Passed on Facebook Deal

Said unit includes many Goldman partners
By Kevin Spak,  Newser Staff
Posted Jan 6, 2011 7:45 AM CST
FILE - In this file photo taken April 19, 2010, people walk to work outside the Goldman Sachs headquarters, in New York.   (AP Photo/Mark Lennihan)

(Newser) – Goldman Sachs wasn’t quite as eager to pump $450 million into Facebook as you might think. The deal was originally offered to, and shot down by, Goldman Sachs Capital Partners, the prestigious group that many current and former Goldman partners invest with, sources tell the New York Times. The unit, which also handles pensions and sovereign wealth funds, didn’t think Facebook was worth the implied $50 billion valuation. Experts have cautioned that Facebook will need years of rapid growth to justify that price.

Only after Capital Partners passed did Goldman itself strike the deal. Now, many of Goldman's most sophisticated clients are turning down the opportunity to buy a stake in the company, in part because Capital Partners rejected it. (It’s also worth noting that after paying the fees Goldman is charging to buy shares, Facebook will need to be worth closer to $60 billion for clients to make any money.) Not that it'll matter; so many investors have jumped at the chance to buy Facebook stock that Goldman will stop taking orders today, and have told buyers they might only get a fraction of what they ordered, the Wall Street Journal reports.

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