Why Did Goldman Use An SPV For Facebook? (GS)

The

is Goldman Sachs

plunking down $450 million from its high net worth clients to invest in Facebook, at a reported $50 billion valuation. Goldman used a "Special Purpose Vehicle" (SPV) to circumvent the rule that's been plaguing Facebook recently. The rule is that Facebook may be close to exceeding 500 investors, and if it did, it would have to go public, according to the SEC. Facebook also raised $50 from Digital Sky Technologies, from which it has previously raised money from before. A SPV is used specifically in this case to circumvent the 500 investor rule in private companies. It allows Goldman's major clients who wanted a piece of Facebook to get into the social media titan, without having the company go public. It's not something most of us can, unless we are a major client of Goldman, or are able to trade on a private exchange, like Second Market. Just another way for the rich to get richer.