Warren E.Buffett Comes to the Aid of a Big Canadian Mortgage Lender
“I believe that when people look back on the events of 2017 at Home Capital, they will see this as a turning point.”
For his part, Mr. Buffett said: “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.”
Under the agreement, while Berkshire will own nearly 40 percent of Home Capital’s shares, it will only vote the equivalent
of a 25 percent stake, to avoid becoming subject to Canadian financial regulations governing lenders.
The latest company to turn to Mr. Buffett, following the likes of Goldman Sachs, Bank of America and General Electric, is the Home Capital Group, a Canadian mortgage lender
that spent the last month shoring itself up after depositors abandoned it in droves after accusations of fraud.
Late on Wednesday, Home Capital disclosed that it had sold a 38 percent stake in itself to an insurance unit of Mr.
Buffett’s Berkshire Hathaway, at a deeply discounted price of 400 million Canadian dollars, or about $300 million.
In the midst of the 2008 financial crisis, the Berkshire chief invested $5 billion in Goldman
and $3 billion in G. E., providing each of the struggling companies with an important show of confidence and capital in its darkest hour.
By MICHAEL J. de la MERCEDJUNE 22, 2017
When big financial companies have needed a rescue over the years, one man has often stood at the ready: Warren E. Buffett.