In September 2008, Mr Buffett's Berkshire Hathaway fund invested $5bn in Goldman at 10% interest.

 

In addition to the interest, Berkshire was given the opportunity to buy billions of additional shares in the future.

 

Goldman is now giving Buffett shares for free to limit diluting³ its stock.

 

In return, the deal means Berkshire does not have to spend billions of dollars up front.

 

Under the 2008 deal, Berkshire had the right - called a warrant - to buy a further 43.5 million shares for $115 each on 1 October this year.

 

The $115 figure compares with Goldman's $147.43 share price in early Tuesday trading.

 

Instead of buying the shares, Berkshire will now get additional Goldman shares equivalent in value to the difference between $115 and the average closing price of Berkshire's shares for the 10 trading days before 1 October.

 

According to estimates, this will make him the bank's ninth-largest shareholder.

 

Goldman Sachs chief executive Lloyd Blankfein said: "We are pleased that Berkshire Hathaway intends to remain a long-term investor⁴ in Goldman Sachs."

 

Mr Buffett, one of America's most celebrated⁵ investors⁶, last month bought the Heinz food products business for $28bn.

 

The 2008 investment in Goldman came at the height of the global financial crisis.

 

It attracted much media attention, specifically surrounding the generous 10% interest the bank agreed to pay Berkshire.

 

Analysts⁷ said this reflected Goldman's need for the funds, and the lack of other potential investors either willing or able to put the money forward.

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