BUF­FETT TO BUY A SLICE OF SA

The Advertiser - - FRONT PAGE - CAMERON ENG­LAND BUSI­NESS ED­I­TOR

THE “Or­a­cle of Omaha”, War­ren Buf­fett, is look­ing for more busi­ness op­por­tu­ni­ties in South Aus­tralia af­ter swoop­ing in to ac­quire the in­sur­ance book of the Mo­tor Ac­ci­dent Com­mis­sion.

Mr Buf­fett’s com­pany, the famed Berk­shire Hath­away, made an un­so­licited, and suc­cess­ful, bid to the Gov­ern­ment to take over man­age­ment of the “back book” of com­pul­sory third-party ve­hi­cle in­sur­ance claims. The deal re­moves a po­ten­tial li­a­bil­ity from the “tail” of in­sur­ance claims left over as the MAC is wound down.

And bud­geted, but not guar­an­teed, re­turns from the MAC to the State Gov­ern­ment of $68 mil­lion over three years from 2019-20 will now not even­tu­ate.

Mr Buf­fett, pic­tured, is a celebrity in in­vest­ment cir­cles for his long-term, value ap­proach to in­vest­ing that has de­liv­ered share­hold­ers strong re­turns.

An ar­ti­cle on in­vest­ing web­site The Mot­ley Fool in April this year cal­cu­lated that over 50 years, Berk­shire Hath­away had de­liv­ered a com­pound an­nual re­turn of more than 20 per cent, or a to­tal gain of more than two mil­lion per cent. Mr Buf­fett’s per­sonal wealth is es­ti­mated at $US86.5 bil­lion and one Berk­shire Hath­away Class A Share is val­ued at $US311,999.

Trea­surer Rob Lu­cas said it was a “sig­nif­i­cant coup” for the state, and the Gov­ern­ment in­tended to re­lease most of the con­trac­tual doc­u­men­ta­tion early next year, with some com­mer­cial de­tails struck out.

Mr Lu­cas said af­ter re­ceiv­ing the bid, the Gov­ern­ment en­gaged fi­nan­cial ad­vi­sory firm Moelis to look at it, and it con­cluded it was “unique and pre­sented as value for money’’.

The MAC is be­ing wound down, a process started by the pre­vi­ous gov­ern­ment, which be­gan pri­vatis­ing the in­sur­ance arm of the MAC in 2014, then an­nounced it would sell its as­sets then es­ti­mated to be worth as much as $2 bil­lion, three years ago. Mr Lu­cas said Berk­shire Hath­away would set up an of­fice in SA and, as it had vast in­vest­ments in ar­eas such as en­ergy and in­fra­struc­ture, there would be the pos­si­bil­ity to work to­gether more.

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