7:30PM New York – Warren Buffett agreed to invest $5 billion in Goldman Sachs.

The Goldman Sachs Group (GS: chart) agreed to sell $5 billion of perpetual stock to Berkshire Hathaway in a private offering which pays 10% dividend and is callable any time at 10% premium.

The deal with legendary investor Warren Buffett, who controls and runs conglomerate also includes warrant to purchase $5 billion of common stock at a strike price of $115 a share which can be exercised at any time in five years.

Goldman will also raised $2.5 billion in public offering.

The recently converted depository bank from an investment bank, Goldman Sachs has largely avoided the current financial market stress rooted in the housing market. But Goldman balance sheet has a leverage of more than 25 and illiquid assets that are hard to value.

“Goldman Sachs is an exceptional institution,” said Warren Buffett, Chairman and CEO of Berkshire Hathaway, Inc. “It has an unrivaled global franchise, a proven and deep management team and the intellectual and financial capital to continue its track record of outperformance.”