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Saudi Sovereign Fund Buys Big Stake in Tesla

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Saudi Arabia’s Public Investment Fund (PIF), the kingdom’s sovereign wealth fund, purchased a large stake in Tesla, Inc. (formerly Tesla Motors). PIF acquired a 3% to 5% stake in the electric auto manufacturer. The exact date and time of the share purchases are unknown to the public. According to current share price figures of Tesla, the stake is worth around US$ 1.7 billion and US$ 3.2 billion. Initially, PIF approached Tesla in 2017 to take Tesla private. PIF then asked for newly-issued shares of Tesla. These shares were acquired on the secondary market, after Elon Musk turned down the issuing of new shares of Tesla. JPMorgan helped PIF acquire the shares in the secondary market.

Elon Musk also tweeted about taking Tesla private. At US$ 420 per share, at least US$ 70 billion would be needed to take the company private. However, far less could be needed if the current investor would roll up their equity into the private vehicle.

Hedge funds manage money from a wide number of capital sources including foundations, family offices, public pensions and sovereign wealth funds. A number of prominent hedge funds have taken short positions against Tesla. Hedge fund Greenlight Capital, managed by David Einhorn, has taken losses trying to short Tesla stock. Greenlight Capital started shorting Tesla a couple of years ago. Einhorn even ended his Model S lease, opting for an electric Jaguar car (Jaguar I-PACE). In August, Einforn revealed to his investors that the Greenlight Capital Fund was down 18.3% in the first half of the year. Einhorn in his investor letter called Musk “erratic and desperate.”

Another Tesla short investor in Jim Chanos of Kynikos Associates. The Alaska Permanent Fund is an investor in a Kynikos fund.

Funds and Ownership, KKR Partners with Shinhan Financial

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South Korean financial giant Shinhan Financial Group Co., Ltd. reached a preliminary agreement with KKR & Co. to form a series of global buyout funds that could raise up to 5 trillion KRW. KKR and Shinhan signed a Memorandum of Understanding (MoU) in Seoul in early October. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Norwegian Government Recommends SWF Remains at Central Bank

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There was speculation that Norway Government Pension Fund Global (GPFG) could be managed outside of Norges Bank. The Norwegian government shot down this idea and recommended Norway’s GPFG remain in Norges Bank. This recommendation came in the form of a white paper submitted to the Norwegian Parliament, Stortinget.

Norway’s Minister of Finance Siv Jensen, commented in a press release, “The Government proposes a new and modernised governance structure for Norges Bank. Moving forward, this new structure lays the foundations for the sound management of the central bank and of the GPFG.”

Some Central Bank Recommendations

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Invesco Buys OppenheimerFunds for $5.7 Billion

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Invesco Ltd. signed a deal to acquire OppenheimerFunds, Inc. from Massachusetts Mutual Life Insurance Company (MassMutual). In turn, MassMutual and the OppenheimerFunds employee shareholders will receive a combination of common and preferred equity consideration, and MassMutual will become a significant shareholder in Invesco, with an approximate 15.5% stake. This strategic transaction will bring Invesco’s total assets under management (AUM) to more than US$ 1.2 trillion. The transaction is expected to close in the second quarter of 2019, pending necessary regulatory and other third-party approvals. The transaction gives Invesco access to more third-party distribution platforms.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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