Saudi Arabia's Public Investment Fund (PIF) has acquired a significant stake in Tesla, a leading electric car maker, reports said.

 

PIF, Saudi Arabia’s sovereign wealth fund, has bought a minority stake in Tesla at just below 5 per cent, a Reuters report said quoting a source familiar with the matter.

 

Earlier, the Financial Times said PIF had bought a 3 percent to 5 percent stake in the company. The stake is worth $1.9 billion to $3.2 billion at the company's current share price.

 

The Saudi fund approached CEO Elon Musk about buying newly issued shares, the FT report said, but Tesla declined. Instead, the PIF bought the shares in secondary markets.

 

Meanwhile, Musk wrote in a Telsa website post that he is considering taking Tesla private at a price of $420 per share. 

 

He said a final decision has not yet been made, but the reason for doing this is all about creating the environment for Tesla to operate best. 

 

"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. 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. Finally, as the most shorted stock in the history of the stock market, being public means that there are large numbers of people who have the incentive to attack the company," he said.

 

"I fundamentally believe that we are at our best when everyone is focused on executing, when we can remain focused on our long-term mission, and when there are not perverse incentives for people to try to harm what we’re all trying to achieve.

 

"This is especially true for a company like Tesla that has a long-term, forward-looking mission. SpaceX is a perfect example: it is far more operationally efficient, and that is largely due to the fact that it is privately held. This is not to say that it will make sense for Tesla to be private over the long-term. In the future, once Tesla enters a phase of slower, more predictable growth, it will likely make sense to return to the public markets," he said.