Tesla CEO Elon Musk confirmed reports on Monday morning that the Saudi Arabian sovereign wealth fund purchased a stake in the company worth almost 5 percent and held discussions with Musk about taking the company private.
The lawsuits also claim Musk hasn't lined up the financing necessary to take Tesla private and therefore made false statements.
Discussions began before the controversial August 7 tweet by Musk, who is Tesla's co-founder and chief executive officer, saying he was weighing a plan to take the company private.
A Saudi sovereign wealth fund is in talks that could make it a significant investor in Tesla if it is taken private.
The transaction would be structured with equity so as not to burden Tesla with crushing debt, Musk added.
This is at odds with a Reuters report, published Saturday, which cited two anonymous sources claiming that PIF has no interest in financing Tesla's bid to go private. Investors who don't want to stay with a private company would be paid $420 per share. People close to at least 16 financial institutions and technology firms, who spoke on the condition of anonymity, have said they weren't aware of financing having been locked in before Musk's tweet.
Saudi Arabia's Public Investment Fund (PIF) is a centerpiece of its initiative to modernize the kingdom's economy.
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The lawsuits filed by Isaacs and William Chamberlain said Musk's and Tesla's conduct artificially inflated Tesla's stock price and violated federal securities laws. Among the reasons, they said, is that SoftBank has already placed big bets on the future of the automobile with General Motors Co., and that Tesla faces increased competition and has yet to deliver on its mass-market ambitions.
These pieces of news pushed Tesla's share price around 12 per cent higher, although most of those gains have since disappeared as reports emerged from The Wall Street Journal and Bloomberg stating the US Securities and Exchange Commission (SEC) had sent a formal enquiry to Tesla about its funding claims.
As the intrigue enters a second week, with pressure increasing on the billionaire founder to explain how a deal would be funded, one of the world's most active investors has already ruled itself out.
The company has invested US$3.5b in Uber in June 2016, teamed up with Softbank for a US$93b tech fund in May, and pledged to invest about US$1b in Virgin Group's space companies, Virgin Galactic in October.
The fund did not immediately respond to a request for comment.
Musk and advisers are seeking a wide pool of investors to back a potential deal.
The current talks about the PIF potentially participating in a take-private transaction started in recent weeks, the other people said.