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Facebook Investment to Come With Substantial Fees

CNBC
Tuesday, 4 Jan 2011 | 9:53 AM ET

Investors looking to piggyback on the Goldman Sachs stake in Facebook will have to pay fees up to 5 percent up front and more later on profits earned, according to potential investors who have been approached about the deal.

CNBC.com

Along with a Russian investor, Goldman Sachs has taken a $500 million stake in the massively popular social networking site in a transaction that puts Facebook's net worth at $50 billion.

Goldman is expected to let some of its high-net-worth clients take part in the buy-in, but at a fairly steep price.

The initial fee is likely to be 4.5 to 5 percent, but there also will be a so-called promote on the back end that will allow Goldman to collect fees from any future profits the stake earns, these investors said.

The high charge comes as Goldman is opting to keep the Facebook stake on its own balance sheet rather than farming it out to its merchant bank division or considering it a strategic investment.

The move also comes as some investors are speculating whether the $50 billion estimate is too high. But investor interest in the transaction is likely to be heavily oversubscribed, sources say.

-Reported by Kate Kelly.

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