CHINA [updated]: Buffett may cash in BYD stake - reports
US billionaire Warren Buffett may reduce his stake in Chinese carmaker BYD according to media speculation.
BYD was China's fastest growing car maker last year but has hit problems this year including sliding sales, a delay in plans to export its electric cars, and a legal dispute with the government over land it wants to develop.
Buffett's visit to China this week had not been seen as good news for the company. The billionaire’s company Berkshire Hathaway bought 10% of BYD in 2008 - an investment that has yielded big rewards with the stake now worth US$1.6bn, nearly seven times the original US$230m purchase price.
However, Reuters noted the current value is well off a peak of US$2.5bn reached last October, leading to speculation that Buffett may be tempted to cash in some or all of his investment for a return that is still impressive.
Buffett and Microsoft boss Bill Gates are in China for a four-day visit, including three stops related to BYD in the cities of Beijing, Changsha and Shenzhen.
BYD flew Buffett to its south China base on Monday for a series of events to showcase its clean car initiatives.
He was invited to Shenzhen for a signing ceremony that will see the company build an energy storage power station with China Southern Power Grid, and a celebration to mark the sale of its millionth car, local media reported.
"This is my first trip to Shenzhen but I promise you it won't be my last," Buffett told the audience at the ceremony. The trip by Buffett, 80, marked his first to BYD, almost two years after Berkshire's affiliate MidAmerican Energy bought the 10% stake in the company.
Reuters noted it could not attend the event due to restricted access but obtained a recorded speech made by Buffett during the ceremony.
He praised Shenzhen, a boomtown near Hong Kong, for taking the lead in using electric vehicles as taxis to help cut pollution.
"Each taxi will produce one-tenth pollution of the regular sedan. If we push more public transportation to change to EV, it will greatly help reduce pollution in the city," he said.
BYD shipped its first batch of all electric cars, E6, earlier this year and all of them were used as taxis in Shenzhen.
Buffett, the world's third-richest man with a fortune estimated by US magazine Forbes at $47bn, arrived in Shenzhen on a jet chartered by BYD, according to the China-based Phoenix website, adding that BYD had spent several million yuan to bring Buffett to visit its China headquarters.
Buffett called BYD a young and promising company that will play a leading role in the future.
He was scheduled to visit BYD's plants in Shenzhen and the city of Huizhou on Tuesday, followed by a trip to Beijing where he was to co-host a charity banquet with Microsoft founder Gates to meet about 50 wealthy Chinese to share ideas about philanthropy, according to the official Xinhua news agency. Buffett and Gates are America's two richest men and the world's top two donors to charity.
Buffett's trip will end with a visit to the central city of Changsha, where he will tour a BYD electric bus plant.
Berkshire Hathaway's initial investment hopes were pinned on the battery maker turned car manufacturer becoming a future leader in electric vehicles.
Reuters said some analysts are questioning the company's ability to deliver its new energy vision. Chinese media reported that BYD had acquired 18% of Zhabuye Lithium, which has mining rights in the country's biggest lithium mine, for about US$30m. Other reports say the company plans to make electrical appliances.
Editor's note: Warren Buffett, the legendary 'sage of Omaha', was in political satirist Garry Trudeau's Doonesbury cartoon strip last week on the subject of billionaire philanthropy. The series starts here.