Saudi Arabia's sovereign wealth fund is in talks that could see it becoming a significant investor in Tesla as part of Musk's plan to take the company private, people with knowledge of the fund's plans said earlier Sunday. Musk wrote that he left the meeting with "no question" that a deal could be closed with the Saudi fund to take Tesla private.
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". 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.
Tesla's board has not received a detailed financing plan from Musk and is seeking more information, sources told Reuters on Thursday. At least two investors have sued Musk and Tesla alleging share-price manipulation. Since the meeting, the men have continued discussions and the managing director has expressed support "subject to financial and other due diligence and their internal review process for obtaining approvals", Musk wrote.
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. While the entrepreneur owns 20 per cent of Tesla, more than US$60 billion would be needed to buy the business from public shareholders. Our largest investors have been extremely supportive of Tesla over the years, and understanding whether they had the ability and desire to remain as shareholders in a private Tesla is of critical importance to me.
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.
"Doing our best with the limited information we have, we come to the conviction that Tesla is unlikely to go private, and anticipate the board will reject Elon Musk's offer or approach", New Street's Pierre Ferragu, who has a $530 price target for the stock, said in a report Monday. As a result, PIF itself made a decision to buy around $2 billion in Tesla shares, reportedly with the help of an investment bank.
The current talks about the PIF potentially participating in a take-private transaction started in recent weeks, the other people said. The government is planning to turn the PIF into a $2 trillion powerhouse to help diversify the kingdom's oil-dependent economy.