Saudi Arabia's Public Investment Fund (PIF) has so far shown no interest in Tesla CEO Elon Musk's proposed $ 72 billion deal to privatize the American electric car maker, despite having acquired a minority interest in the company this year
The 47-year-old investor and engineer stunned the financial markets on Tuesday when he said on Twitter that he was considering a private contract for Tesla, an auto production pioneer who developed the very first luxury in the world -electric sedan. He also said he had secured funding for the proposal without giving details. Investors and analysts considered PIF a natural funding partner. In addition to accumulating just under 5 percent in Tesla, the SWF has invested tens of billions of dollars in technology investments, including $ 45 billion in the SoftBank Group's Vision Fund over five years.
However, one source is known PIF's strategy is that it is not currently involved in a financing process for Tesla's take-private deal. A second source close to the situation also said that PIF was not participating in such a plan at that time. This source said the Saudi fund would not make such an investment without first consulting the Softbank. Reuters reported Wednesday that SoftBank is not pursuing a deal for Tesla due to its investment in competitor GM Cruise earlier this year. The reluctance of PIF will increase the pressure on Musk to provide details on its financing plan.
Tesla's board has not received a detailed financing plan from him and is seeking further information, Reuters reported Thursday.
The Board will decide on whether to hire a consultant for Musk's take-private proposals and launch a detailed review of the Musk funding plan in the coming days, a third source said. The sources demanded anonymity, as the deliberations are confidential. A spokesperson for PIF was not immediately available for comment.
A Tesla spokesman declined to speak on behalf of the company and Musk. The Securities and Exchange Commission has contacted Tesla to inquire about Musk's claim on Twitter that funding for its proposed deal is "secured," the Wall Street Journal reported Wednesday.
Tesla faces 8-year history as a stock corporation at a crucial moment, as competition from European car manufacturers will intensify with new electric vehicles from Mercedes, Audi, BMW and other rivals. The acquisition of Tesla Private would put pressure on Musk, which is vying with hedge funds, for the company's stock to fall in the face of production problems and negative cash flow. It would also remove the company from the light of Wall Street, which publishes publicly with the release of quarterly numbers.
In a letter to employees on Tuesday, Musk advised shareholders to sell their shares for $ 420 each, or remaining investors in a private tesla. Musk also said that in a buyout deal he would try to keep Tesla at about 20 percent, and that a testimonial like his space company Spacex would allow Tesla shareholders to stay invested, so choose. Investment bankers and analysts have been skeptical and told Reuters that for Musk, whose assets are limited to $ 22 billion by Forbes, it would be difficult to raise equity and debt funding as Tesla does not make a profit.
Some analysts have suggested that Musk might persuade Tesla's top shareholders, such as Fidelity Investments and China's Tencent, to stake their stakes in the transaction, which could significantly reduce the amount of money needed. However, the deal structure would be associated with major logistical and legal challenges when it comes to buying smaller shareholders, analysts have said.