Warren Buffett and Salesforce to Invest in Snowflake IPO


Cloud data management company Snowflake revealed in a regulatory filing today that Berkshire Hathaway (NYSE: BRK.A) (NYSE: BRK.B) and salesforce.com (NYSE: CRM) would each make a $ 250 million investment in the company using a concurrent private placement as part of its initial public offering (IPO).

In an amended S-1 filed today with the Securities and Exchange Commission, Snowflake also said it will offer 28 million shares in a range of $ 75 to $ 85 per share, which would raise more than 2 , $ 7 billion for the start-up. That would value the cloud-native company between $ 21 billion and nearly $ 24 billion.

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This move was somewhat surprising to Buffett, given Oracle of Omaha’s track record of avoiding tech issues. That has changed as Ted Weschler and Todd Combs, two of Buffett’s fund managers, have diversified into tech stocks in recent years, adding Apple (NASDAQ: AAPL) and Amazone (NASDAQ: AMZN), among others. Assuming the midpoint of $ 80 per share of the range, the move would earn Buffett 3.125 million shares of the company.

That’s not all. Berkshire also agreed to purchase an additional 4,042,043 shares from current shareholders in a private side transaction, paying an amount equal to the IPO price. This suggests that the combined total of Buffett’s investment could exceed $ 500 million.

Salesforce’s move comes as no real surprise, given the company’s penchant for investing in technology start-ups. In recent years, the tech bigwig has invested in Twilio (NYSE: TWLO), Dropbox (NASDAQ: DBX), and DocuSign (NASDAQ: DOCU), Just to name a few.

Snowflake has recently generated stratospheric revenue growth that appears to be attracting investors. Revenue increased 173% year over year for the fiscal year ended Jan. 31, 2020. The breakneck pace of growth continued into the first half of this year, when revenue increased 133% .


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