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What Role Will The Saudis Play In Tesla's Private Listing?

Musk

A few days after Elon Musk shocked Wall Street and investors by tweeting that he would take Tesla private at $420 a share, speculation is still high on who could invest in what could be the biggest-ever buyout deal. 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.

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. PIF explores ways on how it could be involved in the possible going-private deal, for which Musk prefers to have a larger group of investors instead of just one or two large stakeholders, Bloomberg’s sources say.

According to those sources, PIF’s talks started before Musk tweeted last Tuesday about considering taking Tesla private. The Saudi fund sees its stake in Tesla as a strategic way to hedge against oil, according to Bloomberg’s sources who noted that PIF hasn’t made any decision yet on if it would increase its interest in Tesla.

However, according to sources familiar with the plans who spoke to Reuters, PIF has not yet expressed interest in investing in a buyout, despite the fact that it has now become a minority shareholder in Tesla.

Musk’s email to Tesla employees posted on Tesla’s website on the day of the tweet explained the rationale for the going-private plan, but Musk has yet to prove that the “funding secured” part of his tweet was true.

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. Related: Markets Open Higher Despite Ongoing Turkish Crisis

“This included discussion as to how being private could better serve Tesla’s long-term interests, and also addressed the funding for this to occur. The board has met several times over the last week and is taking the appropriate next steps to evaluate this,” the directors said.

The SEC has asked Tesla if Musk had facts to back up his claim on Twitter that funding is ‘secured’, people familiar with the regulator’s inquiry told the Wall Street Journal last week.

By Tsvetana Paraskova for Oilprice.com

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