Warren’s Alberta Buffet
First Suncor, now AltaLink – what’s next for this guy?
by Alberta Venture Staff
Warren Buffett’s $3.2-billion bid to buy AltaLink from Montreal’s SNC-Lavalin is just his latest investment in Alberta. Last year, it was revealed that Buffett had accumulated 17.8 million shares (worth $743 million at press time) in Canada’s biggest oil and gas producer, Suncor Energy. He has also partnered with TransAlta Corp. on a proposed 800-megawatt, gas-fired electricity generating plant at Wabamun, and a 500-kilometre, 500-kilovolt transmission line to carry that power north to Fort McMurray.* And he even has a stake in Edmonton-based Metalogic Inspection Services, a private company that provides ultrasonic inspection of pipelines, boilers and pressure vessels.
He’s bet big on an Albertan, too, through Greg Abel, a University of Alberta grad and now the president and CEO of Buffett’s company, Berkshire Hathaway Energy. Has his appetite yet been satisfied?
*To be clear, the Suncor shares are owned by Berkshire Hathaway Inc. The AltaLink purchase was made by Berkshire Hathaway Energy (which is 90 per cent owned by Berkshire Hathaway Inc.). TransAlta’s deal is with BHE’s subsidiary, MidAmerican Transmission.
The AltaLink Deal
AltaLink is a regulated, transmission-only business with $5.9 billion in assets. It owns 12,000 kilometres of transmission lines and 280 substations, providing power to 85 per cent of Albertans. Berkshire Hathaway has been fond of picking up hard assets in recent years. “Transmission is a big part of the energy infrastructure, and we saw a really good opportunity,” says company spokeswoman Kelly Groehler. “There are great economic signals in Alberta on energy, and it was an opportunity for us to join into that province.” The deal is set to close on December 31.
Buffett, now 83, has said the board of Berkshire Hathaway has chosen his successor and two alternates, but that the names are to remain a secret for now. Pundits, however, are hard at work with predictions (American hedge fund manager Jeffrey Matthews has written an entire book on the subject). The three favourites are Harvard Business School-educated Ajit Jain, who runs Berkshire’s massive reinsurance businesses, University of Missouri-trained Matthew Rose, who heads Berkshire’s BNSF Railway, and University of Alberta business-school trained Greg Abel. The corporate take on the topic? “We do not comment on speculation over succession,” Groehler says.
Buffett’s Alberta Holdings
|1||AltaLink, being purchased for $3.2 billion|
|2||Suncor: 17.8 million shares, worth $743 million|
|3||An unknown percentage of Edmonton’s Metalogic Inspection Services|
|4||Two joint ventures with TransAlta: TAMA Power (to build an 800-megawatt, gas-fired electricity generating plant at Wabamun); and TAMA Transmission (bidding on a 500-kilometre, 500-kilovolt transmission line to carry that power north to Fort McMurray)|
The Albertan in the Running to Take Over from Buffett
Photo courtesy Midamerican Energy Holdings
President and CEO, Berkshire Hathaway Energy
Hometown: Des Moines, Iowa
His company: Assets of $70 billion; Operating revenue of $12.6 billion; 19,700 employees; 331,000 kilometres of electricity transmission lines
2013 compensation: $10.7 million