OpenAI is close to selling shares in a deal that values the company at a staggering $90 billion – but completing the offer could depend on deep-pocketed investors from the Middle East, On The Money has learned.
The artificial-intelligence juggernaut behind the ChatGPT chatbot – co-founded by Sam Altman and 49% owned by Microsoft – is in talks to help its employees cash out of tens of millions of dollars worth of private stock in a tender offer that’s expected to close Oct. 21, according to sources briefed on the situation.
“There is a lot of overseas demand… some from The Gulf,” one well-placed source told noti.group’s Josh Kosman.
Nevertheless, the outlook for other such pricey tech deals looks murky, according to sources. That’s because US investors appear to be balking at OpenAI’s stratospheric price tag – and the terrorist attacks in Israel could complicate new fundraising from sovereign wealth funds across the Persian Gulf, sources added.
“The fact the Saudis have remained silent about the conflict means anyone taking money is going to think long and hard before they take another political dollar,” a source who raised money in the region said.
Indeed, insiders say question marks are popping up around the seventh annual Future Investment Initiative in Riyadh, Saudi Arabia, which will be hosted by the nation’s sovereign wealth fund, Public Investment Fund Oct. 24 – Oct. 26.
Attendance slumped following the murder of Jamal Khashoggi in 2018, but has flourished since. Last year, one panel included JPMorgan Chase CEO Jamie Dimon, Goldman CEO David Solomon, Blackstone CEO Stephen Schwarzman and Bridgewater Associates founder Ray Dalio.
One financial source said it’s “too early to tell if there’s a long-term impact” from the Hamas attacks. But top leaders will be forced to make a call about whether to visit the region before the end of the month.
“It further complicates the geopolitical situation: We’re waiting to see how countries react… and then companies will react to those countries,” another insider added.
While some weigh the optics of a fundraising trip to the Middle East, others feel that given economic conditions in the US they don’t have much choice.
“Valuations are falling through the floor,” a source lamented. “There are so many down rounds now and it’s tough to get cheap capital anywhere else.”
Others are more optimistic and believe that — like with Khashoggi’s killing — even if the violence dampens deals in the short term, it will be business as usual soon enough.
“There is an inclination to overlook transgressions when money is involved,” another source added. “As long as there is money available people will try and get it.”
OpenAI did not return calls for comment.
[Notigroup Newsroom in collaboration with other media outlets, with information from the following sources]
