Berkshire Hathaway takes $388M stake in Australia's IAG

IAG 2H EARNS
Jeremy Piper | Bloomberg | Getty Images)

Warren Buffett's Berkshire Hathaway has bought a 3.7 percent stake in Insurance Australia Group (IAG) for 500 million Australian dollars ($388 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 percent 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 percent return-on-equity through the economic cycle, it said.