How Fidelity's Ownership in SpaceX Could Be a Model for Tesla
(Bloomberg) -- Elon Musk signaled Tuesday that Tesla Inc. would issue stock privately if he proceeds with a buyout of the electric-car company, and pointed to his relationship with Fidelity Investments as a road map.
The Tesla chief executive officer said in a tweet that he hoped current investors “remain with Tesla even if we’re private” and indicated that he’d create a “special purpose fund” enabling them to do so. As an example, Musk cited how Fidelity invested in his Space Exploration Technologies Corp., which isn’t publicly traded.
It’s unclear what Musk meant by the special-purpose vehicle, but Fidelity has disclosed in regulatory filings that some of its mutual funds acquired SpaceX shares through a series of private placements beginning in January 2015. The Fidelity Growth Company Fund, for example, disclosed that it held about $107 million of SpaceX as of May 31.
A spokeswoman for Fidelity declined to comment. The Boston-based company invests in shares of other private companies including Uber Technologies Inc., Lyft Inc. and Airbnb Inc. through its mutual funds. Under U.S. securities laws, a closely held company can issue stock to an unlimited number of sophisticated investors without going through the registration process required for a public offering.
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