Giant Saudi fund emerges as backer of bid for Elon Musk's Tesla

Giant Saudi fund emerges as backer of bid for Elon Musk's Tesla

Tesla Inc. CEO Elon Musk says he's in talks with the Saudi Arabian sovereign wealth fund about taking the electric auto and solar panel maker private, but no deal has been finalized.

The founder of the electric auto maker also indicated that he would need to raise about $23bn, not the $70bn that had been reported.

Musk says in a blog posted Monday that most of the funding would be in stock rather than debt.

A Saudi sovereign wealth fund is in talks that could make it a significant investor in Tesla if it is taken private.

This is at odds with a Reuters report, published Saturday, which cited two anonymous sources claiming that PIF has no interest in financing Tesla's bid to go private. The US Securities Exchange Board has questioned the authenticity of Musk's tweets.

A Tesla investment would add to the Saudi fund's long growing list of high-profile purchases.

Tesla shares were little changed at US$355.16 as of 10:29 a.m. on Frankfurt's Tradegate, before the USA market opens.

In a separate class-action lawsuit also filed in federal court in San Francisco, William Chamberlain contends Musk "materially" misled investors between August 7 and August 10 claiming investor support for the deal was secured and that the funding was in place. Among the reasons, they said, is that SoftBank has already placed big bets on the future of the automobile with General Motors Co., and that Tesla faces increased competition and has yet to deliver on its mass-market ambitions. In a tweet on Sunday, the nation's Energy Department said Saudi Arabia now is working to develop a city to support the supply of raw materials and parts for the automobile industry.

His comment that he wanted to launch a buyout at $420 a share "would only be used for Tesla shareholders who do not remain with our company if it is private", Musk said in the blog.

SoftBank's decision to back away from any potential Tesla take-private is noteworthy given its self-styled reputation as the investor du jour for any technology or tech-enabled asset that comes to market. "I continue to have discussions with the Saudi fund, and I also 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 and his advisers are seeking a wide pool of investors to back a potential take-private of the automaker to avoid concentrating ownership among a few new large holders, according to people familiar with the matter.

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