Elon Musk is turning to an old, trusted group of financial backers to fund his $ 44 billion acquisition of Twitter – even though talks about merging with a private equity firm have stalled, The Post has learned.
Sources close to the situation say Musk may be close to raising $ 10 billion in cash from co-investors in stocks – mainly venture capital firms that have supported his other companies, including Space X. A source close to the talks refused to name the firms, but Musk’s former investors have included Sequoia Capital, D1 Capital Partners and Valor Equity Partners.
Musk has also approached so-called family offices that control large amounts of private money to support his Twitter bid.
“He has more than $ 1[ads1]0 billion in committed equity,” a source close to the situation told The Post.
Musk is plowing ahead even though top executives at Thoma Bravo – a technology-focused acquisition company whose investments include nut-and-bolt software companies such as McAfee and Barracuda – are divided in their collaboration with Musk in the deal, with some fearing the bet will be too big and too risky. three sources close to the situation.
“Orlando Bravo pushed for it,” said a source close to the negotiations, referring to the firm’s co-founder, a 52-year-old Puerto Rican-born billionaire with a formidable track record among technology investors. “He spent hours talking to Elon.”
On Tuesday, the Wall Street Journal reported that Musk has told investors that he intends to announce the company again within three years of the acquisition. As previously reported by The Post, Thoma Bravo sees an opportunity to cut costs on Twitter and hopes to get a high-profile deal.
Nevertheless, other top partners at Thoma Bravo are concerned that jumping into bed with Musk – who has posted a series of sometimes bizarre tweets about his plans for Twitter, including his plans to make the San Francisco headquarters a homeless refuge – can be a disaster.
“I feel like Orlando Bravo wanted to do that, but one or two of his top partners will not,” said another source.
Musk and Thoma Bravo declined to comment.
Other major acquisition companies, including Stephen Schwarzman’s Blackstone and billionaire Robert F. Smith’s Vista Equity Partners, have also rejected Musk outright, a source said. Apollo Global Management, meanwhile, is only interested in providing debt financing, according to sources close to the negotiations.
Blackstone declined to comment. Vista did not return calls.
Musk has also faced obstacles to raising debt to fund the deal, according to sources. Morgan Stanley, Barclays and Bank of America have pledged to lend Twitter $ 13 billion to complete the acquisition, the sources said. But rival banks Citigroup, Credit Suisse and RBC have all decided not to participate, a source said.
Citigroup and Credit Suisse declined to comment. RBC did not return calls.
Citigroup, Credit Suisse and RBC can lend against Musk’s Tesla stock, known as a margin loan, which Musk said in a filing last month could amount to as much as $ 12.5 billion. Still, they are not willing to lend to Twitter themselves because the interest rate on the new loans may be higher than Twitter’s current cash flow, the lender said.
“There’s an insane amount of gired financing,” the lending source said.
Skitishness among private-equity investors and banks is pushing Musk to raise money elsewhere. As reported by The Post, Musk wants to limit his personal exposure to $ 15 billion, including $ 3.4 billion in shares he already owns, which equates to a 9.2% 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 a willingness to allow a group of existing Twitter shareholders – co-founder Jack Dorsey and Fidelity among them, according to Reuters – to roll over 5 billion dollars in equity into the company when it becomes private.