Saudi Arabia looks to invest big in Tesla

Saudi Arabia looks to invest big in Tesla

Saudi Arabia looks to invest big in Tesla

Tesla Inc Chief Executive Officer Elon Musk said the Saudi Arabian sovereign wealth fund has expressed support for funding a deal that could take the electric auto maker private.

Shares of Tesla surged as much as 3% in early-trading Monday, before paring their gains, after CEO Elon Musk published an update on his plans to take the company private at $420 a share.

That blog post appears to name Saudi Arabia's sovereign wealth fund as being responsible for the funding that Musk said was "secured" in his tweet.

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.

The meeting came after the Saudi fund bought nearly 5 percent of Tesla stock, wrote Musk, who added that most of the capital needed to go private would be funded by private equity rather than debt.

SoftBank isn't planning to participate as a potential source of capital in a deal taking Tesla private, according to people with knowledge of that matter who asked not to be identified as the details aren't public. "I am having discussions with a number of other investors, which is something that I always planned to do since I would like for Tesla to continue to have a broad investor base", Musk wrote.

Following the announcement of Tesla's plans to potentially go private and reports that Saudi Arabia's sovereign wealth fund had amassed a 5% stake, shares surged as high as $389 - a new record.

Musk also said additional debt - a major concern of Wall Street analysts in Tesla's struggle to turn a profit - will not be necessary as part of a transaction to go private, and that any capital required will be raised through equity. He wrote that since the meeting, he has maintained contact with the fund's managing director - suggesting that discussions are continuing.

Musk's tweet stunned investors, with many raising questions about his claim that funding for the venture had been secured.

Tesla's refusal to comment on the issue has added more doubts about Musk's plan even as he claims that the funding has been secured.

While Tesla CEO Elon Musk teased last week about taking the company private, several suitors may have already been courting the electric vehicle giant months ago. It is appropriate to complete those discussions before presenting a detailed proposal to an independent board committee. Shares were up two cents to $355.51 in morning trading. "So the potential investor must be patient and strategic-looking".

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