Saudi Arabia invests $2bn in Tesla
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In a radical step and one that has shocked investors across the globe, Elon Musk announces plans of taking Tesla Inc. private to ease financial losses. The announcement, which was made on Twitter, stunned investors and saw an increase in the company’s stock price by nearly thirteen percent.
At $420 a share, Tesla’s enterprise value is estimated at $82 billion including debt, with Saudi Arabia’s sovereign wealth fund holding less than a 5% stake worth approximately $2 billion. Currently, several question how Musk who owns a 20% stake in the company would be able to raise $66 billion to complete the transaction.
In an e-mail sent to all Tesla employees, Musk wrote: “The reason for doing this is to create the best environment for Tesla to operate in. Wild swings in stock prices are a distraction to workers and puts enormous pressure on Tesla to make decisions that may be right for a given quarter but not necessarily right for the long-term.”
Saudi Arabia’s Public Investment Fund (PIF) acquired shares in Tesla over the past few months as part of its wider strategy to diversify revenue away from oil under an economic transformation plan known as Vision 2030.
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