Published: Mon, August 13, 2018
Markets | By Otis Pena

Saudi Arabia eyes enlarged stake in Musk’s private Tesla

Saudi Arabia eyes enlarged stake in Musk’s private Tesla

Almost a week after Tesla CEO Elon Musk tweeted his intention to take the company private, we still don't know much about the funding for the endeavor - which Musk said was "secured". They then held several additional meetings with me over the next year to reiterate this interest and to try to move forward with a going private transaction.

And while the U.S. Securities and Exchange commission is reportedly looking into Musk's claims, speculation is running wild. The country's Public Investment Fund, which has built up a stake of nearly 5 per cent in Tesla in recent months, is exploring how it can be involved in the potential deal, according to Bloomberg. While the entrepreneur owns 20 percent of Tesla, more than $60 billion would be needed to buy the business from public shareholders. Sources said he is canvassing other potential investors including asset managers. The most recent meeting took place on July 31, after the Saudi fund had accumulated a minority stake of about 5 percent.

Discussions over taking Tesla private have failed before.

His comment that he wanted to launch a buyout at $420 a share "would only be used for Tesla shareholders who do not remain with our company if it is private", Musk said in the blog.

Shares of Tesla are now up 13% this year, but still below their $362 price at the time of Musk's first tweet about going private around 1 p.m. Tuesday.

But Isaacs said Tesla's and Musk's conduct caused the volatility that cost short-sellers hundreds of millions of dollars from having to cover their short positions, and caused all Tesla securities purchasers to pay inflated prices.

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Musk's August 7 tweets helped push Tesla's stock price more than 13 percent above the prior day's close. The Saudi fund hasn't made any firm decisions on whether to increase its stake, or by how much, but talks are ongoing, sources told Bloomberg.

The company has invested US$3.5b in Uber in June 2016, teamed up with Softbank for a US$93b tech fund in May, and pledged to invest about US$1b in Virgin Group's space companies, Virgin Galactic in October. Musk and his advisers are seeking a wide pool of investors to back a potential take-private of the automaker to avoid concentrating ownership among a few new large holders, according to people familiar with the matter.

Musk's failure to promptly file a formal disclosure has led to lawsuits from investors, accusing Tesla of fraudulently planning to squeeze short-sellers.

The SEC, which already had been gathering information about Tesla's public pronouncements on manufacturing goals and sales targets, is intensifying scrutiny of the company's statements in the wake of Musk's tweet, people familiar with the matter have said.

As the intrigue enters a second week, with pressure increasing on the billionaire founder to explain how a deal would be funded, one of the world's most active investors has already ruled itself out.

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