Facebook raises $1.5B, at valuation of $50B

Facebook has raised $1.5 billion in its latest funding round, putting its total valuation at $50 billion and leaving no doubt about its swift ascent in recent years to become a major Internet player and challenger to Google.

Facebook will use the money to boost its cash reserves and gain "financial flexibility" without significant dilution to current shareholders, the Palo Alto, California, company said Friday.

Not long ago, industry observers worried that Facebook wouldn't be able to turn its massive popularity into a business strong enough to withstand competition from Google and others, as well as acquisition attempts.

Facebook raised $500 million from Class A common stock in December, bought by Digital Sky Technologies (DST), The Goldman Sachs Group and funds managed by Goldman Sachs.

On Friday, Goldman Sachs completed an "oversubscribed offering" for clients abroad who invested in $1 billion of Facebook Class A common stock. The two investments together value Facebook at about $50 billion.

"Our business continues to perform well, and we are pleased to be able to bolster our cash position with this new financing," said David Ebersman, Facebook's chief financial officer, in a statement.

Initially, Facebook intended to let U.S. investors participate in the funding round, but Goldman Sachs decided later to limit it to investors abroad, afraid that the media attention might make it illegal under U.S. securities laws, the bank told the Wall Street Journal this week.

Because Facebook is exceeding the 500-shareholder mark, it plans to start filing public financial reports no later than April 30 of next year, Facebook said.

Copyright © 2011 IDG Communications, Inc.

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