Musk says Saudi sovereign fund backs Tesla buyout

The billionaire said he had met the PIF as recently as July 31 when the sovereign fund’s managing director expressed support for a deal



Electric can manufacturer Tesla’s CEO Elon Musk said on Monday that his proposal to take the firm private had the backing of Saudi Arabia’s sovereign fund.

In a lengthy blog post, the billioniare indicated the Public Investment Fund (PIF), which was revealed last week to have acquired an almost 5 per cent stake in Tesla, had expressed an interest “multiple times” to privatise Tesla.

Read: Saudi sovereign fund PIF buys stake in Tesla

“They [PIF] first met with me at the beginning of 2017 to express this interest because of the important need to diversify away from oil,” he said in a section justifying a tweet last week stating “funding secured” for such a deal.

“They then held several additional meetings with me over the next year to reiterate this interest and to try to move forward with a going private transaction.”

Musk went on to state that the “Saudi sovereign fund has more than enough capital needed to execute on such a transaction” and had most recently reached out for a meeting on July 31 in which managing director Yasir Al Rumayyan “strongly trongly expressed his support for funding a going private transaction for Tesla at this time”.

“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. This is why I referred to ‘funding secured’ in the August 7th announcement,” the Tesla CEO clarified, adding communication with the PIF had continued following the announcement.

“He [Rumayyan] has expressed support for proceeding subject to financial and other due diligence and their internal review process for obtaining approvals. He has also asked for additional details on how the company would be taken private, including any required percentages and any regulatory requirements.”

Reuters cited sources in recent days as confirming that the PIF, which has more than $250bn in assets, had shown no interest in bankrolling such a deal.

Read: Saudi wealth fund PIF has shown no interest in bankrolling Tesla buyout

Separately, Bloomberg said on Sunday the PIF was in talks to become a significant investor in Tesla as part of a plan to take the firm private but had made no firm decision.

The US Securities and Exchange Commission had contacted Tesla for clarification regarding Musk’s tweet.

Musk indicated the capital required for going private would be funded by equity rather than debt and reports of $70bn being needed for the transaction “dramatically overstate the actual capital raise needed”.

“The $420 buyout price would only be used for Tesla shareholders who do not remain with our company if it is private. My best estimate right now is that approximately two-thirds of shares owned by all current investors would roll over into a private Tesla.”

Musk later tweeted on Monday he was working with Silver Lake and Goldman Sachs as financial advisors and Wachtell, Lipton, Rosen & Katz and Munger, Tolles & Olson as legal advisers on the deal.

“If and when a final proposal is presented, an appropriate evaluation process will be undertaken by a special committee of Tesla’s board, which I understand is already in the process of being set up, together with the legal counsel it has selected,” Musk explained at the end of the blog post.

“If the board process results in an approved plan, any required regulatory approvals will need to be obtained and the plan will be presented to Tesla shareholders for a vote.”