Saudi Public Investment Fund acquires Tesla shares

08 August 2018
Public Investment Fund invested $3.5bn in Uber in 2016 and $45bn in Japanese Softbank's Technology Fund in 2017

Saudi Arabia's Public Investment Fund (PIF) has acquired shares of just under 5 per cent in US-based technology firm and carmaker Tesla, according to media reports.

According to a report by UK-based Financial Times, PIF acquired shares worth an estimated $1.7bn to $2.9bn over the past few months, making PIF one of Tesla’s largest shareholders.

Hours after news broke about the Saudi investment, Elon Musk - Tesla's CEO - announced via Twitter that he is considering taking the company private at $420 a share.

The tweet sent the company’s shares soaring by as much as 13 per cent and halted trading for one and a half hours before resuming to trade at $380.60 on 7 August. Musk owns 19.9 per cent shares in the firm.

In a letter sent to employees the same day, Musk explained that the decision to go private is not yet final and outlined reasons for wanting to do so.

“As a public company, we are subject to wild swings in our stock price that can be a major distraction for everyone working at Tesla, all of whom are shareholders,” the letter said. “Being public also subjects us to the quarterly earnings cycle that puts enormous pressure on Tesla to make decisions that may be right for a given quarter, but not necessarily right for the long-term.”

PIF has been steadily focusing investments on technology firms.

In 2016, it invested $3.5bn in US-based ride-hailing service Uber. Last year, PIF announced investing $45bn on Japan-based Softbank’s $100bn Technology Fund, which aims to finance new developments in artificial intelligence, mobility and self-driving cars.

PIF also has a 50 per cent stake in online retailer Noon.com, which Emaar Properties chairman Mohamed Alabbar founded.

MEED understands the Saudi sovereign wealth fund recently issued a request for proposals to banks for its first commercial loan, understood to be worth $6bn-$8bn.

PIF is responsible for the delivery of some of Saudi Arabia’s most ambitious projects including the $500bn Neom city project, the Red Sea scheme, major urban developments in Jeddah and Medina, and Qiddiyah entertainment city on the outskirts of Riyadh.

When announcing the 2018 budget in late 2017, Riyadh said that the PIF will be the kingdom’s most active client body in 2018, with spending of $22bn on new and existing projects.

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