Billionaires: Warren Buffett boosts stake in Occidental Petroleum

In our fortnightly round-up of the world's super wealthy, investors buy $1bn worth of stakes in Gautam Adani’s flagship company and green division and Anil Agarwal deepens tech push with $4bn display factory

Warren Buffett's company began buying shares of Houston-based Occidental early last year, around when Russia invaded Ukraine and as oil prices were rising. AP
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Warren Buffett

Berkshire Hathaway has acquired more shares of Occidental Petroleum, boosting its stake in the oil company to above 25 per cent.

The conglomerate, controlled by billionaire Warren Buffett, said in a regulatory filing that it paid about $122.1 million for 2.14 million Occidental shares between June 26 and June 28.

Berkshire had also purchased about 4.66 million Occidental shares on May 30.

Mr Buffett's company began buying shares of Houston-based Occidental early last year, when Russia invaded Ukraine and as oil prices were rising.

It also recently owned about $9.5 billion of Occidental preferred stock carrying an 8 per cent dividend, plus warrants to buy another $5 billion of Occidental shares at $59.62 each.

Berkshire bought the preferred stock and obtained the warrants in 2019 when it helped finance Occidental's purchase of Anadarko Petroleum.

At Berkshire's annual shareholder meeting on May 6 in Omaha, Nebraska, Mr Buffett praised Occidental's management and business but said Berkshire was not planning to acquire the company.

“We're not going to buy control,” Mr Buffett said. “We've got the right management running it.”

Berkshire had amassed a 22.6 per cent stake in the BNSF railway before paying $26.5 billion for the remainder in 2010. BNSF now generates about one-fifth of Berkshire's operating profit.

Berkshire also owns dozens of other businesses including Geico car insurance and many energy, manufacturing and retail companies, as well as stocks such as Apple.

Gautam Adani

GQG Partners and other investors bought stakes worth about $1 billion in two Adani Group companies from the family trust, according to sources.

The investors bought shares in billionaire Gautam Adani’s flagship company and its green arm Adani Green Energy, the sources said.

Mr Adani has been seeking to rebuild market confidence since accusations of fraud by US short-seller Hindenburg Research wiped out more than $150 billion in the value of his companies at one point.

GQG’s Rajiv Jain said in May he wants to be one of the largest investors in the group, arguing that the infrastructure assets, from ports to coal mines and power transmission, are valuable given India’s ambitious growth plans.

In March, GQG acquired almost $2 billion worth of shares in four of Adani’s companies. Two months later, emerging market veteran investor Mr Jain said his company had raised its stake in the Adani Group by about 10 per cent and may take part in any future fundraising by the conglomerate.

His initial purchase of shares, including in the flagship and green energy arm, was from the founding family’s trust.

How India's Gautam Adani lost title as Asia's richest man

How India's Gautam Adani lost title as Asia's richest man

The investments anchored the group’s recovery from the losses sparked by Hindenburg, though all 10 companies are still trading below the levels before the report.

“It seems like the concerns that some had around the group are dissipating,” said Deven Choksey, managing director of KRChoksey Shares & Securities in Mumbai.

“The replacement value of a lot of the group’s assets is much more than their current market value,” he added.

The Adani group has scrapped acquisitions and prepaid debt in an attempt to address concerns about its cash flow and borrowings.

In May, Adani Enterprises and Adani Transmission announced plans to raise a total of $2.6 billion, without committing to a time frame.

Anil Agarwal

The newly appointed chief executive of billionaire Anil Agarwal’s Vedanta Resources’ untried display business is seeking to hire global talent to build and run a $4 billion factory in western India.

Y J Chen, who previously worked at Chinese display maker HKC, said the display venture will soon begin recruiting from South Korea, Taiwan, Japan and other regions to set up a liquid crystal display panel fabrication unit in India.

The factory will create as many as 3,500 direct jobs, he said.

“We need a lot of technicians, very talented people,” Mr Chen, who has 23 years of experience in the display industry, said. “That’s the biggest challenge – people.”

Even as it’s suffering from a heavy debt load, Mr Agarwal’s metals and mining conglomerate is expanding in electronics components to take advantage of India’s push to become a technology manufacturing hub.

The display business is separate from Vedanta’s struggling chip venture and may find an easier path to success as it’s a less technically demanding undertaking.

Vedanta, which has partnered with Foxconn Group affiliate Innolux for the display business, plans to manufacture glass and assemble LCD panels at its new factory.

The unit could start production towards the end of 2025 if it gets crucial funding from Prime Minister Narendra Modi’s government, Mr Chen said.

Mr Modi has pledged $10 billion to woo chip and display makers to India, promising his administration will bear half the cost of setting up all semiconductor and display fabrication sites.

While Vedanta’s chip plans are yet to get government backing, its display business could find it easier to win state incentives, with key tech partnerships in place.

Vedanta also owns Japan-based AvanStrate, which makes layers used in LCD panels.

The company is now seeking to grab a slice of India’s display market, which it expects to grow to an annual $30 billion over the next seven years.

It will have to compete with inexpensive Chinese LCDs and develop newer displays for long-term success.

“We need to build our own supply chain in India,” Mr Chen said. “We will focus on new designs to lower costs and compete with the Chinese.”

Robert Smith

Buyout titan Robert Smith’s Vista Equity Partners more than doubled its initial investment in Apptio after International Business Machines agreed to acquire the software maker for $4.6 billion.

The private equity firm, which bought Apptio in early 2019 for about $1.9 billion, told investors that the deal would return 2.1 times the company's investment after accounting for fees.

Vista has generated $18 billion in total value by cashing in on bets since late 2021, it said in a statement.

The deal gives Mr Smith new ammunition as he scours the globe to raise a $20 billion fund for new deals.

He’s currently worth about $12 billion, making him the 152nd-richest person in the world, according to the Bloomberg Billionaires Index.

Mr Smith is working to show pension funds and investors that the company has moved past his admission of tax evasion after the billionaire paid $139 million to avoid prosecution in 2020.

Like other private equity companies, Vista has had to contend with higher interest rates, unpredictable markets and fears of an economic downturn as it looks to reach its ambitious fund-raising goals.

We are committed to building resilient enterprise software companies, which has proven to be highly attractive to strategic and financial buyers, as well as public markets
Robert Smith, founder of Vista Equity Partners

Vista is best known for its big buyouts of software companies, as well as its detailed playbook of fixing them up and maximising profits.

The Austin-based company has made full and partial exits – including its $4.6 billion sale of software company Cvent Holding to Blackstone earlier this month – as well as recapitalisations, block sales and follow-on offerings.

“We are committed to building resilient enterprise software companies, which has proven to be highly attractive to strategic and financial buyers, as well as public markets,” Mr Smith, 60, said in a statement.

Founded in 2007, Bellevue, Washington-based Apptio sells online services that help companies – including the majority of the Fortune 100 – manage their information technology budgets, forecasting and analysis.

IBM will use available cash on hand for the transaction, which is expected to be completed in the latter half of 2023, the company said.

Mr Smith got his start as an investment banker at Goldman Sachs Group in the late 1990s, where he met billionaire Robert Brockman, who helped fund Vista’s start.

By 2018, Mr Smith’s wealth surpassed Oprah Winfrey’s to make him the richest Black person in the US.

Agencies contributed to this report

Updated: July 03, 2023, 5:00 AM