Saudi wealth fund may in­vest in Musk’s electric car

Tesla and Musk sued by in­vestors in pro­posed US class-ac­tion com­plaints

The Irish Times - - Business News -

Saudi Ara­bia’s sov­er­eign wealth fund is in talks that could see it be­com­ing a sig­nif­i­cant in­vestor in Tesla as part of Elon Musk’s plan to take the electric car maker pri­vate, ac­cord­ing to a per­son with di­rect knowl­edge of the fund’s plans.

The Pub­lic In­vest­ment Fund, which has built up a stake just shy of 5 per cent in Tesla in re­cent months, is ex­plor­ing how it can be in­volved in the po­ten­tial deal, the per­son said on con­di­tion of anonymity.

Dis­cus­sions be­gan be­fore the con­tro­ver­sial tweet last week by Mr Musk, who is Tesla’s co­founder and chief ex­ec­u­tive of­fi­cer, say­ing he was weigh­ing a plan to take the com­pany pri­vate.

It comes as Tesla and Mr Musk were sued over the week­end by in­vestors who said they fraud­u­lently en­gi­neered a scheme to squeeze short-sell­ers, in­clud­ing through Mr Musk’s pro­posal to take the electric car com­pany pri­vate.

Stunned in­vestors

The law­suit were filed three days af­ter Mr Musk stunned in­vestors by an­nounc­ing on Twit­ter that he might take Tesla pri­vate in a record $72 bil­lion (¤63 mil­lion) trans­ac­tion that val­ued the com­pany at $420 per share, and that “fund­ing” had been “se­cured”.

In one of the law­suits, the plain­tiff Kal­man Isaacs said Mr Musk’s tweets were false and mis­lead­ing and, to­gether with Tesla’s fail­ure to cor­rect them, amounted to a “nu­clear at­tack” de­signed to “com­pletely dec­i­mate” short-sell­ers.

The law­suits filed by Isaacs and Wil­liam Cham­ber­lain said Mr Musk’s and Tesla’s con­duct ar­ti­fi­cially in­flated Tesla’s stock price and vi­o­lated fed­eral se­cu­ri­ties laws.

Tesla did not re­spond to a re­quest for com­ment on the pro­posed class-ac­tion com­plaints filed in the fed­eral court in San Fran­cisco. The com­pany is based in nearby Palo Alto, Cal­i­for­nia.

Short-sell­ers, who bor­row shares they be­lieve are over­priced, sell them and then re­pur­chase shares later at what they hope will be a lower price to make a profit, have long been an ir­ri­tant for Mr Musk.

Stock price rise

Mr Musk’s August 7th tweets helped push Tesla’s stock price more than 13 per cent above the prior day’s close. The stock has since given back more than two-thirds of that gain, in part fol­low­ing re­ports that the US reg­u­la­tor, the Se­cu­ri­ties and Ex­change Com­mis­sion (SEC), had be­gun in­quir­ing about Musk’s ac­tiv­ity.

‘‘ Plain­tiff Kal­man Isaacs said Mr Musk’s tweets were false and mis­lead­ing

The SEC, which has been gath­er­ing in­for­ma­tion about Tesla’s pub­lic pro­nounce­ments on man­u­fac­tur­ing goals and sales tar­gets, is in­ten­si­fy­ing its scru­tiny of the com­pany’s pub­lic state­ments in the wake of Musk’s tweet, peo­ple fa­mil­iar with the mat­ter have said.

The Pub­lic In­vest­ment Fund sees its in­vest­ment in Tesla as a strate­gic way for the world’s big­gest crude pro­ducer to hedge against oil, the per­son said.

– Bloomberg /Reuters

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