It all started with a letter to Warren Buffett, followed by an invitation to Omaha, followed by a challenge to New York City.
The result, so far, is the sale of $210 million in State of Israel bonds, which are aimed at boosting that country’s economy.
In a video thank-you last week, Israeli Prime Minister Benjamin Netanyahu singled out Buffett.
“Your personal investment in Israel bonds is a powerful endorsement,” Netanyahu said.
He also noted Berkshire Hathaway Inc.’s 2006 purchase of Israeli manufacturer Iscar, now called International Metalworking Cos., as evidence of Buffett’s support for Israel and its economic growth.
In 1951, Israel Bonds was created to sell bonds in North America, Europe and South America, raising money to build Israel’s economy. Since then the bonds have raised $40 billion, including $1.13 billion last year.
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About a year ago, Israel Bonds had a client in Pennsylvania whose bond was maturing, but the business had been bought by a Berkshire Hathaway company and the client couldn’t get anyone to make a decision on whether to reinvest the money.
After considerable discussion, someone suggested writing a letter to Buffett explaining the situation.
Buffett called back when he got the letter, asking about Israel bonds and inviting representatives to his office. A meeting there led to a dinner meeting in Omaha last November with about 50 investors who bought $60 million in bonds, including a $5 million bond bought by Buffett personally.
The bonds are for two, three, five or 10 years, some with fixed interest rates and some with floating rates.
Buffett said he actually wanted to buy 25-year bonds, or possibly “perpetual” bonds that would keep paying interest forever.
“I believe Israel is going to be there forever,” he said.
Then the challenge from Buffett: If investors at the Omaha company bought $60 million in bonds, then New York City investors should at least double that.
Last week investors in New York met the challenge, buying $150 million in bonds.
Buffett’s first stop was a tour and a lunch with seven investors at One World Trade Center hosted by its developer, Larry Silverstein. Each investor had agreed to buy $5 million in bonds, said Israel Maimon, president and CEO of Israel Bonds.
That evening Buffett attended a supper at a private club with about 100 other investors from the United States, Brazil, Canada and Mexico. Each had pledged to buy $1 million of the bonds, with some institutional investment groups buying $10 million.
After a talk by David Rubenstein, co-founder and co-CEO of the Carlyle Group private equity firm, Buffett answered questions from the attendees for about two hours.
“He mesmerized the audience,” said Stuart Garawitz, vice president of sales for Israel Bonds. “They were so taken by his business acumen and his thinking about life. ... People took notes and tried to listen to every word that he had to say.”
Israeli Finance Minister Moshe Kahlon sent Buffett a congratulatory letter, and he received a menorah that is a replica of one Salvador Dali designed for the Knesset, Israel’s parliament.
Someone asked Buffett to give a message to the people of Israel. His response: “On behalf of a boy from Omaha, I say, ‘Thank you, Israel.’ ”
Israel Bonds CEO Maimon said the situation was different 65 years ago when Israel, facing what seemed like insurmountable challenges, first sold its bonds in the United States.
As for Buffett’s recent support, he said, “We thought he’s done a very nice job.”
The Omaha World-Herald is owned by Berkshire Hathaway Inc.
steve.jordon@owh.com, 402-444-1080, twitter.com/buffettOWH
