Elon Musk is turning to an old, trusted group of financial backers to fund his $ 44 billion buyout on Twitter – even as reunification talks with a private investment company with deep pockets are stalled, The Post has learned.
Sources close to the situation say Musk could be close to raising $ 10 billion in cash from co-investors in equity – mostly venture capital firms that have backed other companies, including Space X. A source close to negotiations, declined to name the companies, but Musk’s previous investors include Sequoia Capital, D1 Capital Partners and Valor Equity Partners.
Musk also turned to so-called family offices, which control large amounts of private money, to support his Twitter offer.
“He has more than $ 10 billion in capital,” a source close to the situation told The Post.
A source said billionaire Orlando Bravo had spent hours talking to Elon Musk. Left: AP; Right: Getty Images
Musk is moving forward, even as senior executives at Thoma Bravo, a technology-focused buyout firm whose investments include software companies such as McAfee and Barracuda, are divided over the partnership with Musk in the deal, with some fearing the stakes will be too high and too high. risky, said three sources close to the situation.
“Orlando Bravo insisted on this,” said a source close to the talks, referring to the company’s co-founder, a 52-year-old Puerto Rican-born billionaire with vast experience among technology investors. “He spent hours talking to Elon.”
A source said Bravo “insists” on his company supporting Musk.AFP via Getty Images Uncertainty among private equity investors and banks is pushing Musk to raise money elsewhere. AFP via Getty Images
The Wall Street Journal reported on Tuesday that Musk had told investors he intended to make the company public again within three years of the buyout. As previously reported by The Post, Toma Bravo sees an opportunity to cut spending on Twitter and hoped to make a high-profile deal.
However, other top partners at Thoma Bravo are worried that jumping into bed with Musk – who has posted many sometimes weird tweets about his Twitter plans, including plans to turn his San Francisco headquarters into a homeless shelter – could to be a disaster.
“My point is that Orlando Bravo wanted to do it, but one or two of his top partners don’t want to,” said a second source.
Musk and Toma Bravo declined to comment.
Other major buyout companies, including Stephen Schwartzman’s Blackstone and billionaire Robert F. Smith’s Vista Equity Partners, have also turned down Musk altogether, a source said. Meanwhile, Apollo Global Management is only interested in providing debt financing, according to sources close to the negotiations.
Blackstone declined to comment. Vista did not answer calls.
According to sources, Musk is also facing obstacles in raising debt to finance the deal. Morgan Stanley, Barclays and Bank of America have pledged to lend $ 13 billion to Twitter to complete the buyout, sources said. But rival banks Citigroup, Credit Suisse and RBC have decided not to participate, said a lending source.
Citigroup and Credit Suisse declined to comment. RBC did not answer calls.
Top partners at Thoma Bravo are worried that jumping into bed with Musk could be a disaster.
Citigroup, Credit Suisse and RBC may provide loans against Tesla’s shares to Musk, known as a margin loan that Musk said in a statement last month could amount to $ 12.5 billion. However, they are reluctant to lend against Twitter itself because the interest rate on these new loans could be higher than Twitter’s current cash flow, the lender said.
“This is a crazy amount of leverage financing,” said the source of the loan.
Uncertainty among private equity investors and banks is pushing Musk to raise money elsewhere. According to The Post, Musk wants to limit his personal exposure to $ 15 billion, including the $ 3.4 billion he already owns, which equates to a 9.2 percent stake in the company.
In addition to raising $ 10 billion in cash from co-investors who have supported his companies in the past, Musk has signaled he is ready to allow a group of existing Twitter shareholders – co-founder Jack Dorsey and Fidelity among them, according to Reuters – to invested more than $ 5 billion in equity when it became private.
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