Elon Musk testified on Monday that he was sure he had backing from Saudi financiers in 2018 to take Tesla private, as he defended himself against claims that he defrauded investors by tweeting about his electric car company.
At a trial in San Francisco Federal Court, Mr Musk told the investors' lawyer Nicholas Porritt that on July 31, 2018, he met representatives of Saudi Arabia's Public Investment Fund at Tesla's factory in Fremont, California.
He said he did not discuss a takeover price, but the Saudi representatives made it clear they would do whatever it took to make a buyout happen.
“PIF unequivocally wanted to take Tesla private,” Mr Musk said.
The trial tests his habit of taking to Twitter to air his sometimes irreverent views, and when the world's second-richest person can be held liable for crossing a line.
At stake are millions of dollars for shareholders who claim they suffered losses after Mr Musk tweeted on August 7, 2018, that he had “funding secured” to take Tesla private at $420 a share, and that “investor support is confirmed”.
Tesla's stock price surged after Mr Musk's tweets, and later fell as it became clear that the buyout would not happen.
A jury of nine will decide whether the billionaire artificially inflated Tesla's share price by promoting the buyout's prospects, and if so by how much.
The plaintiffs have already cleared high legal hurdles in the rare securities class action, with US Judge Edward Chen ruling last May that Mr Musk's post was untruthful and reckless.
But in Monday's testimony, he said he believed he could have sold enough shares of his rocket company SpaceX to fund a buyout, and “felt funding was secured” with SpaceX stock alone.
The US Securities and Exchange Commission also sued Mr Musk over the tweets, leading to a combined $40 million in settlements for him and Tesla, and a requirement that a Tesla lawyer screen some of his tweets in advance.
The SEC had alleged that Mr Musk rounded the buyout offer to $420 a share from $419 because he had recently learnt about the higher amount's “significance in marijuana culture” and thought his girlfriend would find it funny.
Mr Musk denied having thought that.
“It was chosen because it was a 20 per cent premium over the stock price,” he testified. “The $420 price was not a joke.”
He began testifying on Friday, telling jurors that while Twitter, which he bought in October, was the most democratic way to communicate, his tweets did not always affect Tesla stock the way he expected.
“Just because I tweet something does not mean people believe it or will act accordingly,” Mr Musk said.
The defendants also include current and former Tesla directors, who Mr Spiro said had “pure” motives in their response to the plan.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Fixtures
Friday Leganes v Alaves, 10.15pm; Valencia v Las Palmas, 12.15am
Saturday Celta Vigo v Real Sociedad, 8.15pm; Girona v Atletico Madrid, 10.15pm; Sevilla v Espanyol, 12.15am
Sunday Athletic Bilbao v Getafe, 8.15am; Barcelona v Real Betis, 10.15pm; Deportivo v Real Madrid, 12.15am
Monday Levante v Villarreal, 10.15pm; Malaga v Eibar, midnight
