Warren Buffett Snowflake participation causing ripples!
Berkshire Hathaway will invest around US $550 million in the start-up, which is about to go public.
Berkshire Hathaway of investor Warren Buffett, is to invest about $550 million in the Silicon Valley start-up, Warren Buffett Snowflake. This comes from a mandatory notification to the SEC, which has been published on the afternoon of Tuesday.
Berkshire will buy $250 million worth of shares in a private placement if Snowflake goes public. That corresponds to around 3.1 million shares. Additionally, the company will also purchase four million shares from Robert Muglia, former Snowflake CEO.
The highly acclaimed cloud start-up’s stocks will range from $75 to $85 apiece. That would mean Muglia’s stake in Warren Buffett Snowflake would be worth more than $300 million and Berkshire would hold just under 20 percent of major shares. Salesforce’s venture capital arm, which already has a partnership with the start-up, will also invest another $50 million in Snowflake.
The move is highly unusual for Berkshire. Buffett has always flirted with the fact that he is not familiar with new technologies and therefore does not invest in the area. Last year he also said that he did not believe in going straight into a company to go public.
However, the Berkshire boss, who turned 90 at the end of August, is no longer making all the decisions himself. His investment managers Ted Weschler and Todd Combs each manage a portfolio of around 14 billion dollars and could be behind this step of Warren Buffett Snowflake.
Buffett has always been good for surprises in the past few weeks. His investment in gold producer Barrick was considered unusual, as was his stake in five commodity traders in Japan. Berkshire is sitting on $147 billion in cash and has been looking for new deals for years. This is why observers have long considered it possible that Buffett, Weschler and Todd could break new ground.
For Snowflake, the investment is another accolade. The start-up, led by the Dutchman Frank Slootman, is considered the most promising of a number of Silicon Valley companies that are planning to go public this year.
What will we hear next about Warren Buffett Snowflake?