Saudi Arabia eyes enlarged stake in Musk’s private Tesla

US market regulators are reportedly stepping up their scrutiny of Elon Musk's claim that he has the financing to take Tesla private

The tweets are aimed at "shorts", or investors who borrowed shares of Tesla and immediately sold them with the hope that Tesla's share price would fall.

Reuters reported on August 11 that the PIF has shown no interest so far in financing Musk's proposed deal, while CNBC said on August 9 that Musk previously talked with the Saudi fund about a take-private deal, citing one person familiar with the matter.

Saudi Arabia is exploring how it could bankroll Elon Musk's ambitious plan to take Tesla private, as burnt short-sellers sue the electric auto entrepreneur over his bombshell tweet last week.

The tweet saw Tesla share prices jump (climbing $20 above their opening price within a matter of hours), leaving investors who had "shorted" the stock - or put money on Tesla's stock price dropping - questioning whether Musk could back up such market-sensitive claims.

Last week, Musk stunned investors when he Tweeted about wanting to take Tesla private at US$420 per share before issuing a formal statement on the company's website.

Musk had discussed going private with SoftBank CEO Masayoshi Son previous year but the duo failed to come to an agreement regarding ownership of the company. Musk said he had a July 31 meeting with representatives of the Saudi Arabia sovereign fund and left it "with no question" that a deal could be closed.

Tesla's board revealed they will be discussing the proposal to take the company private with investors this week.

The current talks about the PIF potentially participating in a take-private transaction started in recent weeks, the other people said. He is yet to back up his claim that he has financing for the transaction. That has led to inquiries by the Securities and Exchange Commission into the situation and now two class-action lawsuits by investors who USA Today reported contend the company violated federal securities laws via the tweets.

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

It is understood Saudi Arabia views an investment in Tesla as a strategic hedge against the oil price. 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.



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