Report: Saudis May Only Play Small Part in Musk’s Plans to Take Tesla Private

Despite Elon Musk’s assurance to investors that the Saudi sovereign fund has enough money to finance his plans to take Tesla private, a new report indicates that receiving such an investment from the fund isn’t quite as simple as Musk seems to think.

Reuters reports that despite Elon Musk assuring Tesla investors this week that “obviously, the Saudi sovereign fund has more than enough capital needed” to take Tesla private, there are a number of other factors in play that could prevent the fund from investing up to $72 billion to take Tesla private.

It is true that the Saudi sovereign fund is worth approximately $250 billion, but the Public Investment Fund (PIF) is currently involved in a number of ventures and investments meaning that cash may not be so readily on hand. The fund has invested $45 billion in a new tech fund from Japan’s Softbank, the fund has made a $3.5 billion investment in ride-sharing app Uber, and has invested $1 billion in Virgin Group’s space ventures. Another $20 billion has reportedly been invested in a new infrastructure investment fund from Blackstone.

A banker at a major Gulf firm operating in Saudi Arabia commented on the chances of the fund investing in Tesla, stating: “They could handle part of taking Tesla private, but not necessarily a large part of it and certainly not all of it.” Musk reportedly does not believe that he needs to raise the entire $72 billion value that Tesla would be worth based on his projections of $420 a share-bid because he expects that many current Tesla shareholders will roll their shares into a private Tesla. Musk himself has a 20 percent stake in the company while the Saudi PIF already has a five percent stake.

An international banker who regularly deals with the Saudi fund commented on the current state of the fund saying: “The PIF is not nearly as liquid as people might like to think.” The banker also noted that Saudi Arabia is dealing with its own economic issues at home and that further investment in their own country is likely a priority for those running the PIF. “If it spends tens of billions of dollars overseas and the domestic economy is still slumping, it won’t look good to some Saudis,” the banker said.