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Buffett's Berkshire Hathaway takes $388 million stake in Australia's IAG

Reuters
Warren Buffett speaks at his Secret Millionaires Club 'Grow Your Own Business Challenge' in Omaha, Nebraska, United States, May 18, 2015. REUTERS/Lane Hickenbottom

SYDNEY (Reuters) - Warren Buffett's Berkshire Hathaway Inc (BRKa.N) has bought a 3.7 percent stake in Insurance Australia Group (IAG.AX) for A$500 million (£249 million) as part of a partnership that IAG said would reduce its capital requirements and support its return on equity targets.

Berkshire will buy 89.77 million shares at A$5.57 each, IAG's closing price on Monday, and take a 20 percent quota of IAG's consolidated insurance business over 10 years, IAG said on Tuesday.

The deal with the world's best known value investor would support IAG's goal of delivering 15 percent return-on-equity through the economic cycle, it said.

(Reporting by Lincoln Feast; Editing by Richard Pullin)