According to reports from WRJ and VenturBeat the Goldman Facebook deal will likely go overseas to complete the private placement of Facebook shares. For those of you living on Mars Goldman invested $450 million into Facebook at a $50 billion valuation. Goldman states the move comes because of intense media attention here in the United States. However, the decision to offer a private placement overseas falls under Regulation S instead of of Regulation D of the SEC. The scrutiny of the the Goldman Facebook deal by the SEC was going to be by the book and this will certainly alleviate pressure on how Goldman can market and solicit for the deal.
This is an extremely important legal distinction because with regulation S, a private placement offering of Facebook contains absolutely no domestic investors in the offering. Regulation S defines when an private offering of securities will come internationally and therefore not be subject to the registration obligations imposed under Section 5 of the 1933 Act by the SEC.
I recently setup up a limited partnership for a real estate project raising capital through the EB5 Program (international capital) and found that offering a private placement of shares under Regulation S is more tolerant than all the Regulation D solicitation and registration guidelines of the SEC. As Global wealth escalated during the US recession and domestic capital markets become illiquid foreign capital was in vogue.
Since private has become the new public you can bet the SEC will continue to investigate private offerings taking place on SecondMarket. In the meantime, Goldman will be securing $1.5 Billion for Facebook overseas.
