> Warren Buffett Blog: Warren Buffett invests in Australian company for first time

Tuesday, June 23, 2015

Warren Buffett invests in Australian company for first time

Last week the world's greatest living investor and third richest person made his first foray into the Australian stock market with a US $390 million stake in Australian insurer IAG.

Shares in the insurance group quickly jumped 4 per cent; the investment was widely hailed as a vote of confidence in IAG and in Australia generally.

Under the deal, IAG is issuing Buffett's investment conglomerate Berkshire Hathaway with $390 million (Australian $500) million worth of shares for a 3.7 per cent stake in the company. Berkshire Hathaway will also receive 20 per cent of IAG's insurance premium revenue and cover a fifth of the insurance customers' claims in exchange for an undisclosed fee.

For Berkshire Hathaway, the deal means a fast track into Asia, where IAG is strong, as well as the premium income.

Buffett has committed to the deal for the next decade, but envisages the investment will be much longer term.

Warren comments after the deal were , 
"I am 84 years old and this is my first investment in an Australian company - I have been very derelict, but it has been worth waiting for. Even though this contract only runs for 10 years, I expect for decades and decades and decades we will both benefit from this"
- Warren Buffett