Warren Buffett’s Berkshire Hathaway Inc. has stepped in to inject funds into Home Capital Group Inc., the Canadian alternative lender attempting to rebound from near collapse after being accused by regulators of misleading investors.
Berkshire Hathaway has agreed to indirectly acquire C$400 million ($300 million) of the Company’s common shares on a private placement basis and provide a C$2 billion line of credit facility to subsidiary Home Trust Company, the company said in a statement late Wednesday in Toronto.
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“Home Capital’s strong assets, its ability to originate and underwrite well-performing mortgages, and its leading position in a growing market sector make this a very attractive investment,” Buffett said in the statement.
The move is the latest sign of a turnaround in the 30-year-old lender after a regulator in April accused it of misleading shareholders on mortgage fraud, which sent its shares tumbling, sparked withdrawals and threatened to disrupt Canada’s real estate sector. Earlier this week, Home Capital agreed to sell a clutch of commercial mortgages to affiliates of KingSett Capital Inc. for C$1.16 billion in cash.
Source: Bloomberg Markets