Saudi Arabia's Public Investment Fund (PIF) has shown no interest so far in financing Tesla Inc CEO Elon Musk's proposed $72 billion deal to take the USA electric auto maker private, despite acquiring a minority stake in the company this year, two sources familiar with the matter said.
"Going back nearly two years, the Saudi Arabian sovereign wealth fund has approached me multiple times about taking Tesla private", Musk wrote in a blog post.
Why did I make a public announcement?
Musk has also said he would be looking to keep his ownership of Tesla at around 20 percent in a buyout deal, and that a special goal vehicle, like the one that exists at his aerospace company SpaceX, would allow Tesla shareholders to remain invested if they so choose.
In a letter to employees on Tuesday, Musk suggested a choice for shareholders of selling their shares for $420 each or remaining investors in a private Tesla. To be clear, when I made the public announcement, just as with this blog post and all other discussions I have had on this topic, I am speaking for myself as a potential bidder for Tesla. Musk has said he still expects to own about 20 percent of Tesla after any transaction, and that he hopes all shareholders will remain owners of a private company.
The Financial Times reported last week that Saudi Arabia's sovereign wealth fund - overseen by Saudi Crown Prince Mohammed bin Salman - built up a 3 percent to 5 percent stake in Tesla. CEO Elon Musk's audacious plan to take the carmaker private is distracting dealmakers from a normally quiet August spent in the Hamptons or Southern France.
Musk also wrote that the Saudis are interested in the company because they want to diversify away from oil. "I understood from him that no other decision makers were needed and that they were eager to proceed". During the meeting, the Managing Director of the fund expressed regret that I had not moved forward previously on a going private transaction with them, and he strongly expressed his support for funding a going private transaction for Tesla at this time. He also said that by taking the electric vehicle company private it would end "negative propaganda from shorts".
The transaction would be structured with equity so as not to burden Tesla with crushing debt, Musk added. But Tesla shares were up only minimally in early trading, suggesting investors are yet to be convinced. I will now continue to talk with investors, and I have engaged advisors to investigate a range of potential structures and options.
According to the report, which cites people with knowledge of PIF's plans, the fund is working to be a part of "any investor pool that emerges" to take Tesla private.