Buffett's Berkshire Hathaway takes US$388m stake in Australia's IAG

[SYDNEY] Warren Buffett's Berkshire Hathaway Inc has bought a 3.7 per cent stake in Insurance Australia Group for A$500 million (S$522.2 million) as part of a partnership that IAG said would reduce its capital requirements and support its return on equity targets.

Berkshire will buy 89.77 million shares at A$5.57 each, IAG's closing price on Monday, and take a 20 per cent quota of IAG's consolidated insurance business over 10 years, IAG said on Tuesday.

The deal with the world's best known value investor would support IAG's goal of delivering 15 per cent return-on-equity through the economic cycle, it said.

REUTERS