Berkshire Hathaway (read as Warren Buffet) buys a stake in India’s largest digital payments company, PAYTM by Vijay Shekhar Sharma
US Based Billionaire investor Warren Buffet’s company Berkshire Hathway (BRKA) has bought a stake in Paytm, one of the largest digital payment company in India. Berkshire Hathaway has invested 2500 crores in Paytm, whose parent company is one97 communication. However, the report claims that warren buffet was not involved personally in the current deal. Todd Combs, one of Berkshire’s key fund managers is seen as a potential chief investment officer and leading the transaction. The deal will value one97 at $10 Bn. This investment by Berkshire is considered to be its first investment in India.
On Monday, it was reported that Berkshire was in talks to invest between 20 billion to 25 billion rupees ($286 million to $357 million) and pick up a 3-4 percent stake in One97 Communications.
Berkshire Hathaway is impressed by the scale that Paytm has been able to build in a short period of time. They realize that technology companies go through a cycle of losses before they start generating cash,” said a second source. Just before the 72nd Independence Day Paytm partnered with SoftBank to launch its wallet service in Japan to grow eminently and extend its presence all over the globe.
This development can put Paytm to establish as a trusted brand in the US and nearby market. Also, it’s quite a boost in the Indian startup ecosystem.
Why Berkshire invested in PayTm
The Noida-based company said last month that it conducts 5 billion transactions worth $50 billion in gross transaction value (GTV) on an annualized basis based on its performance in June. It saw total income increase by 38% to Rs 828 crore with losses of Rs 899.6 crore in the year ended March 2017, according to Registrar of Companies (RoC) filings.
Berkshire had tried its hand in India in 2011 with Bajaj Allianz general but exited two years later due to lack of profitability. This would be his first investment in tech led company who is supposed to be moving towards profitability soon.
Paytm is India’s one the biggest mobile payment startup founded by Vijay Shekar Sharma. Earlier, Paytm has got investment from Japan’s Softbank and Chinese tech giant Alibaba its fintech arm Ant Financials.