What a difference 24 hours makes: just yesterday, Reuters reported citing “two sources familiar with the matter”, that Saudi Arabia’s Sovereign Wealth Fund, the Public Investment Fund (PIF) which recently acquired a stake just shy of 5% in Tesla in the open market, “has shown no interest so far in financing Tesla CEO Elon Musk’s proposed $72 billion deal to take the U.S. electric car maker private, despite acquiring a minority stake in the company this year.” Reuters also added that the PIF “was not currently getting involved in any funding process for Tesla’s take-private deal.” Separately, “a second source close to the situation said PIF was not taking part in any such plan at this stage.”
Less than a day later, in what many have suggested may be damage control to avoid a gap lower in Monday trading, Bloomberg reports precisely the opposite and citing another “person with direct knowledge of the fund’s plans” that 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 the Bloomberg source, the PIF is exploring “how it can be involved in the potential deal” and adds that discussions began before the controversial Aug. 7 tweet by Musk saying he was weighing a plan to take the company private.
Which is notable because that is the opposite of what Reuters reported.
The reasoning is somewhat bizarre: according to the report, the Saudis – whose sovereign wealth fund has been especially cash strapped in recent months as a result of the collapse of the Aramco IPO – see the investment in Tesla “as a strategic way for the world’s biggest crude producer to hedge against oil.“
And while the Saudi fund hasn’t made any firm decisions on whether to increase its stake, or by how much, the anonymous source said that “talks are ongoing” and it wasn’t immediately clear how much the fund would invest in Tesla.
The immediate answer here would be, “not much”, because as the FT reported last week, the sovereign wealth fund is lacking in the one key variable needs to make a deal, any deal happen: money, to wit:
“Riyadh is now taking radical steps to boost the fund’s coffers. The Royal Court instructed Saudi Aramco to acquire the fund’s 70 per cent stake in Saudi petrochemicals maker Sabic, potentially raising $70bn for the PIF, three people familiar with the matter said.”
Then again, all is fair in keeping up the narrative, even if it means even greater scrutiny of every public statement thrown out there by the press in support of Musk’s MBO proposal, especially now that the SEC is sniffing around and lawsuits are flying.
The U.S. Securities and Exchange Commission, 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 Bloomberg rebuttal of the Reuters story also comes just days after 2 class action lawsuits were filed against Tesla and Elon Musk for fraud and market manipulation. And with the Bloomberg story now out, those two cases effectively fall apart as there is a public record, even though after the fact, that Musk was telling the truth.
And since it is impossible to deny the Bloomberg report, even if it conflicts completely with what Reuters reported, for now Tesla appears to be safe.
As to who is telling the truth, and who is lying – because both the Reuters and Bloomberg reports “citing anonymous sources” can not be correct at the same time – it will ultimately be up to regulators to untangle what is becoming one of the biggest and most controversial financial stories of this generation.
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Author: Tyler Durden