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Buffett buys BYD stake

Justine Lau
Financial Times [1]
Wednesday, October 1, 2008

An agreement by a company controlled by Warren Buffett to take a 10 per cent stake in BYD sent shares of the Chinese electric carmaker and rechargeable battery producer soaring on Monday.

MidAmerican Energy, 87.4 per cent owned by Mr Buffett’s Berkshire Hathaway, will buy 225m shares in the Shenzhen-based company for HK$1.8bn ($230m) at a 4.76 per cent discount to the stock’s closing price of HK$8.4 last Friday.

News of the deal – Mr Buffet’s first strategic investment in the mainland – pushed shares in BYD up 42 per cent to a close of HK$11.9 on Monday after they rose earlier to as much as 90.5 per cent. BYD Electronics, a mobile phone component-making affiliate, rose 21.3 per cent to HK$2.11.


The purchase marks the first large investment by Mr Buffett in China after Berkshire Hathaway last year sold its entire stake in PetroChina. That divestment allowed Mr Buffett to make about $3.5bn on what had been an investment of about $500m in 2003.

Less than a year ago, Mr Buffett was urging caution to investors on the Chinese stock market at a time when it was at its peak.

The Shanghai market has fallen 56 per cent since the start of the year. BYD, which stands for Build Your Dreams, had plunged 56.2 per cent during Friday since a high of HK$19.158 last October.