Home Capital Shares Surge
CBJ — U.S. billionaire Warren Buffett’s Berkshire Hathaway will inject a $2 billion line of credit to Home Capital Group and specifically to its unit Home Trust Co. The news sent shares of Home Capital surging by almost 18%.
Berkshire Hathaway will also indirectly buy $400 million of Home Capital’s common shares in a private placement through its unit Columbia Insurance Co.
“Home Capital’s strong assets, its ability to originate and underwrite well-performing mortgages, and its leading position in a growing market sector make this a very attractive investment,” said Warren Buffett, Berkshire chairman and CEO.Berkshire will hold an about 38.39 per cent equity stake in Home Capital after buying 40 million shares at an average price of about $10.00 per common share.
Berkshire will make an initial investment of $153.2 million to buy 16 million common shares and an additional investment of $246.8 million to purchase 24 million shares through a private placement.
The Ministry of Finance said it was ‘pleased’ to see Home Capital’s funding issues addressed.