The folks in US would have probably created a fund just to be able to invest in Facebook. But Goldman Sachs’ recent plans might spoil the plans of American investors. The investment banker’s acquisition a $450 million position in privately held Facebook led to creation of frenzy in the capital market of US. It was going to offer these shares privately to those who were willing to invest $2 million and above. In its subsequent announcement through the Wall Street journal, it came out that it has had a shift of plans and that the offering will be limited to only offshore investors.
It was apparently the way-too-much media frenzy that got in the way of this offering. Goldman Sachs fears that this kind of attention might not be onsistent with the proper completion of a U.S. private placement under U.S. law securities law. The banking company also confided that it wasn’t directed by SEC or other authorities to do so. It was purely regulatory vulnerability that scared the company and this the only way to get out it.
Goldman Sachs is definitely not happy with their decision. But owing to some big short time gain, they cant afford to jeopardize the health of their company. With other social networking juggernauts like LinkedIn too getting into public offering of equity, the show at US capital market would be an interesting thing to follow.