Saudi Arabia eyes enlarged stake in Musk’s private Tesla

Anna Jefferson
August 13, 2018

PIF is in talks to take part in any pool of investors that would fund the buyout, Bloomberg News reported on Sunday, citing people with knowledge of the Saudi fund's plans.

In a separate class-action lawsuit also filed in federal court in San Francisco, William Chamberlain contends Musk "materially" misled investors between August 7 and August 10 claiming investor support for the deal was secured and that the funding was in place.

That blog post appears to name Saudi Arabia's sovereign wealth fund as being responsible for the funding that Musk said was "secured" in his tweet.

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On the day following the tweet, Tesla's Board of Directors members Brad Buss, Robyn Denholm, Ira Ehrenpreis, Antonio Gracias, Linda Johnson Rice, and James Murdoch said that Elon Musk had opened a discussion with the board in the previous week about taking the company private. While the entrepreneur owns 20 per cent of Tesla, more than US$60 billion would be needed to buy the business from public shareholders. The fund itself has not publicly commented on the possibility of a deal.

"My best estimate right now is that approximately two-thirds of shares owned by all current investors would roll over into a private Tesla". It also reflects the fact that Tesla, once the clear leader in the electric-car market, is facing increasing competition and has yet to deliver on its mass production ambitions.

"When you have these grand-vision companies, the founders - these leaders - don't want to have some investors have control", Gene Munster, a managing partner at venture capital firm Loup Ventures said in a Bloomberg TV interview, talking about the idea that Musk wouldn't want to bring in any large new shareholders.

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Am considering taking Tesla private at $420.

Tesla had burned through $ 739.5 million in cash in the second quarter and Musk had assured that the company will post a profit in the next quarter.

Tesla was reportedly courted by Japan's SoftBank in April of previous year, though sources told Bloomberg on Monday that the conglomerate isn't planning to participate in deals for Tesla's buyout as it has already vested interest in other auto makers and autonomous vehicle programmes, like General Motors. The company, which held talks with Musk in 2017 about a possible investment, isn't interested in revisiting such a plan, said the people, who asked not to be identified as the details aren't public. "At this stage, it is hard for Tesla to convince the general investors that delivery will ramp up quickly". As a result, PIF itself made a decision to buy about US$2 billion in Tesla shares on the market with the help of an investment bank, the person said. Sources said he is canvassing other potential investors including asset managers. The Saudi government is trying to diversify the country's economy which is dependent on oil. In a tweet on Sunday, the nation's Energy Department said Saudi Arabia now is working to develop a city to support the supply of raw materials and parts for the automobile industry.

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Bin Salman is the second most senior member of the Saudi regime, which has one of the worst human rights records in the world. But she said: "At the same time, we hope that Saudi Arabia and Canada will find a civilized solution to their differences".

-With assistance from Oliver Sachgau, Dinesh Nair, Zaid Sabah, Ed Hammond and Yan Zhang.

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