Tesla Inc (TSLA.O) launched on Tuesday its largest program of new equity sales as a public company, aiming to cash in on the electric carmaker’s soaring Wall Street interest to raise up to $ 5 billion that would relieve future debt pressures.
The move comes one day after a 5-for-1 stock split took effect, Tesla’s first since its initial June 2010 public offering, following an almost six-fold increase in the value of its shares this year.
Tuesday’s share sale comes as Tesla plans to significantly increase its current vehicle production and build new factories close to Berlin, Germany, and Austin, Texas.
The company also plans to launch new vehicle lines including the Tesla Semi and the revolutionary Cybertruck.
Tesla said it plans to use the proceeds from the bid to improve its balance sheet and for general business purposes.
Craig Irwin, an analyst at Roth Capital Partners who have on stock the equivalent of a ‘buy’ ranking, said Tuesday that the capital raise had not come as a surprise.
“All the facilities they are building will need cash, and new growth initiatives,” Irwin said. Ten major banks will execute the transaction, including Goldman Sachs (GS.N), Bank of America Securities (BAC.N), Citigroup Global Markets (C.N), and Morgan Stanley (MS.N), the electric carmaker said in a filing, giving no deadline for its completion.
David Whiston, an analyst at Morningstar Research, said how much money Tesla eventually would earn remains to be seen. At the end of June, the firm had $8.6bn in cash and cash equivalents.
Tesla had revealed plans in February to raise $2bn in a stock deal. The high-flying stock of the group has risen another 70 percent since the split was revealed on August 11, and closed on Friday at over $2,000 before the separation.
With a market capitalization now about $465 billion, it became the world’s largest value-added automotive maker in July and has pushed the personal fortune of Chief Executive Elon Musk past $100 billion.