Aussie banks such as Westpac are drawing Warren Buffett's attention
Business mogul Warren Buffett is committed to expanding business in Australia for the long-term.
As Business Review Australia previously wrote, the American entrepreneur recently claimed an ownership stake in Insurance Australia Group (IAG). Buffett claimed a 3.7 per cent ownership stake along with 20 per cent of IAG’s gross written premiums over the next 10 years in exchange for US$500 million.
Now Buffett has turned his interest to Australian banking.
“Banking is something I have looked at,” Buffett said. “I am comfortable with banks. We have some big positions in U.S. banks. In looking at banks, I would say there is a good chance that five years from now, we will have bought one or more positions in Australian banks.”
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Over the past year, Aussie banks have underperformed compared to their international peers. Some reasons for this include a weaker Australian dollar, investor concerns over higher capital requirements instituted by the nation’s banking regulator as well as continued fear of a weakening housing market.
Westpac Bank (WBK) is an especially attractive asset for global investors with a market capitalisation of US$79 billion. Although the stock has been down over the past year, there is potential for it to double during the next several years.
Australia’s economic growth will be higher than many anticipate in coming years. Some reasons for this are a high population growth rate, one of the world’s lowest debt-to-GDP ratios as well as a new infrastructure construction projects in the Asia-Pacific region.
The Aussie population growth rate of 1.7 per cent is more than twice of the United States, and over six times more of European countries. Most of this is due to the country’s strong immigration program, which grants visas and citizenship to highly skilled workers. Also, unlike those in the U.S., Aussie banks have begun severe underwriting standards in recent years.
Buffett’s other interests in Australia include his BYD Auto company, which began selling energy storage units in Germany. His Berkshire Hathaway empire is a shareholder of the Shenzhen, China-based company, and joins rivals such as Tesla, Panasonic and LG Chem in Australia, and has sold over 100 storage systems in the country.
The American billionaire is also impacting the structure of the Aussie economy, as treasurer Joe Hockey recently said he’s considering Labor’s proposal of the “Buffett Rule,” which will set a minimum tax rate of 35 cents on the dollar for anyone earning over $300,000.
It appears the Buffett era in Australia is set to take off.
Timeline: India takes unicorn leap with six in five days
We chart an historic week in India’s tech industry, where in just five days, between 5-9 April 2021, the country achieved six new unicorns, bringing India’s total to 10 in 2021 to date, an immense unicorn leap from just seven in 2020 and six in 2019.
April 5: Meesho
India’s first social commerce unicorn, Meesho raised US$300m from SoftBank, Facebook and Shunwei Capital, giving the Bangalore-based startup a US$2.1bn valuation, a threefold jump from its previous funding round in 2019. Founded in 2015 by two IIT-Delhi graduates, Meesho connects producers and resellers, helping small businesses sell through social media. It has 45m customers and has enabled 13m entrepreneurs to start their online businesses with no investment.
April 6: CRED
Founded just over two years ago, Bangalore-based credit card repayment app CRED raised US$215m from Falcon Edge Capital and Coatue, nearly trebling its valuation to US$2.2bn from its January US$80m round. Allowing customers to pay off their credit card debt while earning CRED coins which they cash in for rewards, CRED has grown rapidly during COVID-19, doubling its customer base to nearly 6 million in a year.
April 7: API Holdings / Groww
The first epharmacy startup to gain unicorn status, PharmEasy (API Holdings), which has digitised 60,000 brick and mortar pharmacies and 400 doctors across India, raised US$350m in a round led by Prosus Ventures. Founded by four former Flipkart employees as a way of making investing simple, investment platform Groww became India’s second-youngest fintech unicorn, raising US$83m in Series D funding led by Tiger Global, quadrupling its previous round in September.
April 8: ShareChat
New Delhi-grown social media startup ShareChat, founded in 2016 by Mohalla Tech raised US$502m from Lightspeed Ventures, Tiger Global, Twitter and Snap taking its raised total over six rounds to US$766m and pushing its valuation to US$2.1bn. The funding will be used to grow its user base and short video platform Moj, which launched in 2020 following TikTok’s ban in India. The regional language startup claims 280m users.
April 9: Gupshup
AI-led conversational message startup joined the unicorn club after raising US$100m from Tiger Global giving it a ten-fold valuation of US$1.4bn. The smart messaging platform, which has seen accelerated growth during the pandemic, was founded in Bangalore in 2005 by serial entrepreneur Beerud Sheth, whose online freelancing platform Elance is now listed. Gupshup’s API enables 100,000+ businesses to build messaging and conversation experiences across 30+ communication channels.