Buffett keen to invest in Japan

Berkshire Hathaway is seeking deals in the US and some Asian nations

NEW YORK - Warren Buffett, who canceled a trip to Japan after the March 11 earthquake and tsunami, said his Berkshire Hathaway Inc would be "delighted" to invest in that nation and elsewhere in Asia, including Hong Kong and India.

"It is a very big economy and it's one we would feel comfortable in," Berkshire's chairman and chief executive officer said of Japan on Sunday at a news conference.

Buffett visited India in March to hunt for opportunities in a $1.3 trillion economy that may expand more than 9 percent in the year ending March 31 2012, the second-fastest after China among Asia's major economies. He also stopped in South Korea, which he called a "hunting ground" for acquisitions. Japan was dropped from the itinerary after the earthquake, which he later said created a "buying opportunity" for investors.

"We'd be delighted to make investments in Japan," Buffett, 80, said at the news conference, held a day after Omaha, Nebraska-based Berkshire's annual shareholders meeting. "I will be just as enthusiastic about investing in Japan as I would have been six months ago."

Berkshire's insurance segment posted a first-quarter underwriting loss of $821 million, compared with a profit of $226 million a year earlier. The Japan quake cost the firm about $1.1 billion. Berkshire is seeking deals in the US and abroad as profit climbs.

The company's cash holdings rose to $38.2 billion as of Dec 31, prompting Buffett to tell investors two months later that his "elephant gun has been reloaded, and my trigger finger is itchy."

Berkshire would consider deals in "dozens" of countries if "we like their prospects and we like their management," Buffett said at the news conference. "We will answer the phone or open the letter that comes from China, Japan, India."

Berkshire began selling insurance to Indian consumers in March after striking a deal with Bajaj Allianz General Insurance. The nation's 26 percent foreign-ownership limit deters the company from investing in India's insurance industry, Buffett has said.

Buffett has invested in China through takeovers and stock purchases, including Berkshire's 10 percent stake in BYD Co, an automaker based in Shenzhen. He last visited the world's most populous nation in September.

Berkshire Vice-Chairman Charles Munger said China "is willing to push people around," such as relocating farmers, to make way for economic development projects. "India's not willing to do that," Munger said at the news conference. "India tends to allow the people to stop projects."

Biggest deal

Buffett's largest acquisition of a non-US firm was the $4 billion Berkshire paid in 2006 for an 80 percent stake in Iscar Metalworking Cos, a maker of cutting tools based in Tefen, Israel.

Last year, he completed the biggest deal of his career with the $26.5 billion takeover of railroad Burlington Northern Santa Fe, calling it an "all-in wager" on the US economy.

At a news conference following the company's annual meeting last year, Buffett said he hoped Berkshire would make a significant acquisitions in Japan.

Before the earthquake and tsunami, Buffett had planned to visit a factory run by Iscar's Tungaloy unit, about 40 km from Tokyo Electric Power Co's damaged Fukushima Daiichi nuclear power plant.

Bullish bet

Iscar Chairman Eitan Wertheimer said sales may decline in Japan after Tungaloy halted work at the factory and evacuated most of the 1,400 employees there.

Berkshire has a bullish derivative bet on the Nikkei-225 Stock Average, which has declined 5.6 percent since March 10.

Buffett sold put options on the indexes and may be required to make cash payments when the contracts begin to mature in 2018. Until then, Berkshire reports mark-to-market gains and losses based on the quarterly performances of the indexes.

India's economy may expand as much as 9.25 percent in the year ending March 31, the country's finance ministry said in February.

Bloomberg News

(China Daily 05/03/2011 page17)