Published: Mon, August 13, 2018
Finance | By Cynthia Curry

Saudi Arabia might be interested in helping Tesla go private

Saudi Arabia might be interested in helping Tesla go private

One of the potential financiers of the US$82-billion taking-Tesla-private deal could be Saudi Arabia's sovereign wealth fund Public Investment Fund (PIF), which was said to have acquired just below 5 percent in Tesla before Musk tweeted about his idea to make the EV maker private.

While Tesla CEO Elon Musk teased last week about taking the company private, several suitors may have already been courting the electric auto giant months ago.

Musk published a blog post confirming a report that Saudi Arabia's Public Interest Fund would be the previously unknown party bankrolling the move to re-privatize the company - and revealing that his tweet last week claiming "funding secured" was merely an assumption on his part.

The wealth fund recently bought almost five per cent of Tesla's shares.

Second, with $230 billion in assets and big ambitions, it is one of few entities that can actually finance Tesla going private, which might cost up to $72 billion. Shares were up two cents to $355.51 in morning trading.

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.

I left the July 31st meeting with no question that a deal with the Saudi sovereign fund could be closed, and that it was just a matter of getting the process moving.

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Musk wrote that he made the August 7 announcement because he had talked to large investors about his desire to take the company private.

The Saudi fund's talks began before the controversial August 7 tweet in which Musk said he was weighing a plan to take the company private. "So the potential investor must be patient and strategic-looking". "At this stage, it is hard for Tesla to convince the general investors that delivery will ramp up quickly".

The tweets are aimed at "shorts", or investors who borrowed shares of Tesla and immediately sold them with the hope that Tesla's share price would fall. 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.

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.

The current talks about the PIF potentially participating in a take-private transaction started in recent weeks, the other people said.

The Saudi government is planning to turn the fund into a $2 trillion powerhouse to help diversify the oil-dependent nature of the kingdom's economy.

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