SecondMarket Launches ‘The Facebook Fund’ To Buy Shares Before IPO (FB, GSVC)

March 19, 2012 by Jon C. Ogg

Source: courtesy Facebook Inc.
SecondMarket is taking a new approach to allowing investors to buy into Facebook ahead of the upcoming IPO, and it is quite different from any efforts to date from this company.  SecondMarket is about to make Facebook shares much more accessible even before the social network behemoth comes public.

The private shares exchange this morning sent out an email to its members noting, “SecondMarket has created a way for qualified investors interested in smaller lot sizes of Facebook shares to participate in our weekly auctions. Effective immediately, investors may bid for 5,000 to 20,000 Facebook shares through SecondMarket’s Facebook fund, which will then purchase Facebook shares for its own account through the auction. If your bid is successful, you will be able to purchase a number of membership units in SecondMarket’s Facebook fund equal to the number of Facebook shares that the fund purchased based on your bid.”

While there are entities like GSV Capital Corporation (NASDAQ: GSVC) which already own Facebook shares, this is the first effort of a crossover from a legitimate and reputable firm to create a Facebook fund.

Facebook is a part of our TOP 17 IPOs TO WATCH IN 2012, and actually it is THE most important IPO of the year.

Effectively, this brings down the minimum investment to close to $200,000 and the summary notes, “Upon a Facebook liquidity event, the fund will distribute shares directly to the investor brokerage accounts.”

The distribution noted that the fund expects to hold the Facebook stock until 180 days after a Facebook Liquidity Event.  The fund charges a 3% subscription fee, collected upon an investor subscribing to the fund. The fund also charges a 3% distribution fee, payable in shares of Facebook stock upon distribution.

JON C. OGG

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