Buffet compamy buys 10pc stake in BYD
A unit of Warren Buffett's listed flagship Berkshire Hathaway has bought a 10 per cent stake in battery, handset component and carmaker BYD.
The HK$1.8 billion deal will allow Mr Buffett to tap into BYD's foray into the clean energy sector through electric car development.
The news is likely to bolster BYD's share price, as Mr Buffett is known to be a shrewd investor with the Midas touch. Berkshire reaped more than HK$12 billion of profit by investing and selling PetroChina shares between 2003 and last year.
Electricity and natural gas utility MidAmerican Energy Holdings, 87.4 per cent owned by Berkshire, bought 225 million shares in BYD, MidAmerican said in a statement.
The price of HK$8 per share represented a 4.76 per cent discount to last Friday's close of HK$8.40. The company did not specify whether they were existing or new shares, but said MidAmerican and BYD would hold a press conference today.
'As worldwide discussions relating to global climate change and environmental impact continue, the technologies being developed by BYD will be an integral part of the future,' said David Sokol, the chairman of MidAmerican.
In the first half, BYD sourced about a third of its profit from the manufacturing of rechargeable batteries, a third from mobile-telephone components and a third from cars.
The company has been researching and developing an electric car that can also run on petrol as a back-up fuel, and plans to launch the car before the end of the year.
As the cost of petrol soars and pressure to cut the burning of fossil fuel increases, the electric car is seen as a solution for vehicle manufacturers to meet future requirements.
Existing hybrid cars on the market, which run primarily on petrol but also use a rechargeable battery to enhance fuel efficiency, are increasingly popular.
BYD posted an interim net profit drop of 7.07 per cent to 595.66 million yuan (HK$676.56 million) on a slower economy and higher material costs.
