While Elon Musk’s massive $US44 billion ($61 billion in Aussie terms) buyout of Twitter might seem like a one-man show, it’s really a kind of Suicide Squad of big tech moguls and financiers coming together in a strange rogue’s gallery reunion. Not only were Musk’s personal rich friends in the mix, but the holding companies of Middle Eastern nations and a few moneyed crypto supporters jumped in head first. All of them have Musk’s ear and are looking to steer Twitter in one direction or the other.
As much as this last week has seemed like a migraine-inducing dive into one man’s ludicrous, single-minded pursuit of making Twitter profitable, it’s also just as likely that Musk is feeling the pressure from the more than 20 companies, venture firms, banks, and at least one Saudi prince who have certain expectations of a return on investment.
But despite their hopes, investors may have already lost out. Because Musk spent so much time trying to back out of the Twitter deal, he caused the company’s stock price to waver and generally sink, not to mention that many of the biggest tech companies have not done too hot in 2022. That original $US54.20 ($75) per share asking price has become a greater rock to bear over these last few months.
One of the heads of Manhattan Venture Partners, Andrea Walne, admitted to Business Insider back in October “we’re all trying to get out of it,” referring to the Twitter deal. They were especially unhappy with what they were paying for a company that might look more like a $US10 ($14) billion or $US12 ($17) billion company, rather than the $US44 ($61) billion they were expecting to partly shoulder. MVP put a noted $US7.1 ($10) billion equity into the Twitter deal.
Alex Spiro, Musk’s attorney, told Insider that “the vast majority of equity investors have been spoken to and are all in.” So far, we don’t have a singular idea on how many of those who promised funds are all paid up.
With some advertisers looking to cut ties with Twitter, the platform could be hurting for funds as time goes on. Musk himself noticed that Twitter has had “a massive drop in ad revenue” and further blamed “activists” for pressuring advertisers off the platform.
Twitter has had a massive drop in revenue, due to activist groups pressuring advertisers, even though nothing has changed with content moderation and we did everything we could to appease the activists.
Extremely messed up! They’re trying to destroy free speech in America.
— Elon Musk (@elonmusk) November 4, 2022
Musk took out nearly $US13 ($18) billion in loans for his purchase, and he’ll be spending years paying the interest off those loans. Now that Twitter is a private company, those loans and interest payments are being laid like a steaming cow patty on Twitter’s financial books. Bloomberg has reported that Musk will need to pay $US1 ($1) billion on that debt every year for the next few years. Back in April, The New York Times warned of this exact situation where Musk and Twitter could lose enough advertising that paying back loans appears to be a harsher prospect.
Other than the loans and equity investments, most of the funds came from the world’s richest man himself, around $US25 ($35) billion, though to this day we still don’t know if there were more folks who chipped in, according to The New York Times. The billionaire sold Tesla shares and used more shares as collateral for these loans, according to past Securities and Exchange Commission filings.
Bloomberg puts Musks’s total net worth at a little under $US200 ($278) billion. Though his status as the world’s wealthiest man remains intact, he — like much of the globe’s ultra wealthy — have seen declines. It’ll be interesting to see how the ongoing Twitter debacle impact’s Musk’s wealth. He’s certainly got the time, and the platform, to whine about it more than ever.
All the info included in this article is what we know up to this point. It’s unclear which investors have paid up and if others got cold feet. We’ll keep updating this post if more information comes out down the line.
$US12 ($17).5 billion in joint loans from banks and lenders
Filings show Musk acquired a joint $US12 ($17).5 billion loan from six major international lenders. These include:
- Bank of America
- BNP Paribas
- Morgan Stanley
- Societe Generale
Looking deeper into these loans, there’s about $US3 ($4) billion of both secured and unsecured bridge loans, which are short term loans that usually include relatively high interest rates. Another $US6.5 ($9) billion came from a credit facility, which is structured to allow a borrower a set time to repay the loan and interest. The loans were led by Morgan Stanley which took a 27% share of the debt.
A recent report by Bloomberg stated that the banks may have a hard time selling off the debt, though reports have shown they went through with the financing paperwork anyway ahead of the deal’s finalization.
Prince Alwaleed bin Talal
The Saudi Arabian royal family have had an active stake in Twitter for years. A holding company held by the crown family have maintained their stake throughout the whole process of Musk’s acquisition, and like the other members of Twitter’s board of directors, they came out of the purchase with a fattened purse and a smile, knowing Musk overpaid for the platform’s declining stock price.
Anyway, Prince Alwaleed bin Talal reportedly put $US1 ($1).89 billion into Musk’s investment, which amounted to a little under 35 million shares.
It’s unclear how much of a stake the Saudi Arabian royal family maintains with Twitter now that it’s a private company, though as Al Jazeera reported in October, the holding company will maintain its company shares in the Musk era as well. The company has been cited in investigations for allowing legions of accounts tied to the royal family to harass Saudi-critical journalists. The U.S. has alleged that at least two former Twitter employees had worked on the side for Saudi Arabia, passing the royal family information about Saudi dissidents. One of those former employees was convicted this past August in U.S. federal court.
Marc Andreeson and Ben Horowitz of a16z
AH Capital Management is the venture capital firm founded by Marc Andreesen and Ben Horowitz and it’s been listed as one of the main players that helped Musk acquire Twitter. The founders of the venture firm also called a16z are practically kingmakers in the tech startup world. They’ve been on board since at least May, originally saying they “believe in Ev and Jack [Dorsey, the original Twitter co-founder] vision to connect the world and we believe in Elon’s brilliance to finally make it what it was meant to be.”
And what is that vision, you may ask? Andreesen and Horowitz are big into the promises of “Web3,” which mostly exists today as an ill-defined dream of a decentralized internet. Dorsey had envisioned Twitter as a decentralized platform and had regretted allowing it to go public. Sriram Krishnan, a crypto partner at a16z, was brought into the fold to assist in Musk’s transition. Although there could be some disagreement between Dorsey’s vision and what a16z actually wants — at least if you think Dorsey unfollowing Krishnan on Twitter is indicative of deeper resentment or ideological differences.
It’s especially interesting to note that recent reports have alleged that Musk has paused development of a crypto wallet compatible with Twitter. Just what is going on inside may only become clear after some of the dust clears.
Binance’s Chief Strategy Officer Patrick Hillmann confirmed with Axios that the crypto exchange dumped $US500 ($694) million into Musk’s Twitter buy as an equity investor. This has been apparent for some time, but the Axios report sheds some light on why the crypto company and Changpeng Zhao, the CEO of Binance, were so interested in little ol’ Twitter.
According to the report, Zhao actually reached out to Musk after spending 40 hours in debate with his internal team. For that money, Zhao expects to be able to engage Musk with ways to “collaborate or help” with something down the line.
Of course, Zhao is a prolific tweeter himself, and is often conversational about whatever’s going on in the news with his exchange, even its fair share of controversy.
Our intern says we wired the $500 million 2 days ago, probably just as I was being asked about Elon/Twitter. https://t.co/gM65GHUnZC
— CZ 🔶 Binance (@cz_binance) October 28, 2022
Hillman also told CoinDesk that Zhao sees a future of where “Web3” could be used to plug the holes in Twitter’s increasingly leaky ship.
Larry Ellison, founder of Oracle
Larry Ellison, the founder of Oracle, and Elon Musk go way back, so it’s a “no, duh” that Ellison would jump on board Musk’s party bus into hell from the get go. According to Musk’s texts sent to Ellison back in April, the Oracle founder and regular Republican donor was gung ho from the outset, even offering Musk “a billion… or whatever you recommend.”
Ellison did sink $US1 ($1) billion into the deal through his trust, and he’s seemed to stick to his pledge. Musk was apparently texting Ellison into the early morning hours regarding him trying to put the deal on hold back in May, but Musk allegedly deleted those messages, according to court documents filed by Twitter’s legal team at the time.
Qatar Holding LLC
The sovereign wealth fund for the oil and cash-rich country put in $US375 ($521) million of its own funds into the Twitter deal. Apparently, this deal was in exchange for shares of Musk’s holding company.
VyCapital is a tech investment firm based in Dubai and has committed $US700 ($972) million to the deal. The firm had previously invested in Musk’s The Boring Company, so it seems like they were settling in for a second round of Elon’s antics despite Boring Company’s rather lacklustre results so far.
Sequoia Capital Fund
The California-based venture investment firm had also previously invested in The Boring Company, and had promised $US800 ($1,111) million to Musk’s Twitter buy. The firm was reportedly committed to the deal at least back nearly the beginning of October. During a Wall Street Journal TechLive conference, Sequoia’s head Roelof Botha reportedly confirmed that he believed in Musk’s ability to turn Twitter profitable. The two know each other from when Musk was invested in PayPal holdings, and apparently believes Musk has the power to succeed.
Fidelity Management & Research Company
Fidelity Management is the mutual funds advisor to the much larger Fidelity Investments. The Boston-based services giant committed $US316 ($439) million to the Twitter deal. Before that, Fidelity owned more than 17.6 million shares in Twitter, according to the Boston Business Journal.
Aliya Capital Partners
Aliya Capital Partners invested $US360 ($500) million in the Twitter buy. It is a Miami, Florida-based investment management company, and likely saw opportunity in the company changing hands.
Brookfield, a Canadian investment company, put $US250 ($347) million of their funds into the Twitter purchase. It’s not like the firm is hard up if something happens to their investment. They manage over $US690 ($958) billion in assets, according to Reuters.
BAMCO is an investment advisor which sunk $US100 ($139) million into the Twitter deal through its Baron Partners Fund. Ron Baron, the CEO of Baron Capital, owned quite a lot of Twitter shares before the deal went down, and he told CNBC earlier this year that he thought Musk got a good deal on Twitter, though it’s unclear what he may think now after months of declining Twitter stock.
The New York City-based investment banking firm Strauss Capital put forward $US150 ($208) million toward the deal. According to Nasdaq, the firm mostly handles middle market companies.
Witkoff Capital is the firm of Steven Witkoff, a New York real estate tycoon. Witkoff invested $US100 ($139) million in Musk’s Twitter buy.
DFJ Growth IV Partners
DFJ Growth Partners invested another $US100 ($139) million in Musk, though they have bet big on the routine tweeter before, having previously invested in Musk’s companies including Tesla, SolarCity, SpaceX, and The Boring Company.
All those shelling out $US25 million or less
A.M. Management & Consulting
Now we’re really getting down to the dregs. A.M. Management & Consulting put forward $US25 ($35) million into the Twitter deal. The firm is based in New York City.
Litani Ventures is a small Chicago-based venture capital firm that put $US25 ($35) million toward the Twitter purchase.
Tresser Blvd 402 LLC
The unknown group put forward $US8.5 ($12) million through Connecticut hedge fund Cartenna Capital.
Honeycomb Asset Management
Honeycomb Asset Management put forward a bare $US5 ($7) million toward the purchase. The firm mainly deals with media and technology investments.
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