August 15, 2022

Elon Musk is turning to an old, reliable group of financial backers to fund his $44 billion buyout of Twitter — even as talks to team up with a deep-pocketed private equity firm have stalled, The Post has learned.

Sources close to the situation say Musk may be closing in on raising $10 billion in cash from equity co-investors — mostly venture capital firms who have backed his other companies including Space X. One source close to the talks declined to name the firms, but Musk’s past investors have included Sequoia Capital, D1 Capital Partners and Valor Equity Partners.

Musk has also turned to so-called family offices that control large pools of private money to back his Twitter bid.

“He has more than $10 billion of committed equity,” one source close to the situation told The Post.

A source said billionaire Orlando Bravo spent hours talking to Elon Musk.
Left: AP; Right: Getty Images

Musk is plowing ahead even as top executives at Thoma Bravo — a tech-focused buyout firm whose investments include nuts-and-bolts software firms like McAfee and Barracuda — are divided over partnering with Musk in the deal, with some fearing the bet would be too big and too risky, three sources close to the situation said.

“Orlando Bravo was pushing for it,” one source close to the talks said, referring to the firm’s co-founder, a 52-year-old, Puerto Rican-born billionaire with a formidable track record among tech investors. “He spent hours talking to Elon.”

A source said Bravo was “pushing” for his firm to back Musk.
AFP via Getty Images
Elon Musk
Skittishness among private-equity investors and banks is pressuring Musk to raise cash elsewhere.
AFP via Getty Images

On Tuesday, the Wall Street Journal reported that Musk has been telling investors he aims to take the company public again within three years of the buyout. As previously reported by The Post, Thoma Bravo sees an opportunity to slash costs at Twitter and was hoping to land a high-profile deal.

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Nevertheless, other top partners at Thoma Bravo fret that jumping into bed with Musk — who has posted a slew of sometimes bizarre tweets about his plans for Twitter, including that he plans to turn its San Francisco headquarters into a homeless shelter — could be a disaster.

“My sense is Orlando Bravo wanted to do it but one or two of his top partners don’t want to,” a second source said.

Musk and Thoma Bravo declined to comment.

Other major buyout firms including Stephen Schwarzman’s Blackstone and billionaire Robert F. Smith’s Vista Equity Partners also have turned Musk down altogether, a source said. Apollo Global Management, meanwhile, is only interested in providing debt financing, according to sources close to the talks.

Blackstone declined to comment. Vista did not return calls.

Musk also has faced hurdles raising debt to fund the deal, according to sources. Morgan Stanley, Barclays and Bank of America have committed to lending Twitter $13 billion to complete the buyout, the sources said. But rival banks Citigroup, Credit Suisse and RBC have all decided against participating, a lending source said.

Citigroup and Credit Suisse declined to comment. RBC didn’t return calls.

Thoma Bravo logo
Top partners at Thoma Bravo fret that jumping into bed with Musk could be a disaster.
ThomaBravo

Citigroup, Credit Suisse and RBC may provide loans against Musk’s Tesla stock, known as a margin loan, which Musk said in a filing last month could total as much as $12.5 billion. Nevertheless, they aren’t willing to lend against Twitter itself because the interest on those new loans might be greater than Twitter’s current cash flow, the lender said.

“It’s a crazy amount of leveraged financing,” the lending source said.

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Skittishness among private-equity investors and banks is pressuring Musk to raise cash elsewhere. As reported by The Post, Musk is looking to limit his personal exposure to $15 billion, including the $3.4 billion in shares he already owns that equal a 9.2% stake in the company.

In addition to lining up $10 billion in cash equity from co-investors who have backed 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 in equity into the company when it goes private.