Warren Buffet’s Berkshire Hathaway in talks to pick up stake in India’s Paytm - Reports

27th Aug 2018
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On Monday, media reports stated that Warren Buffet’s Berkshire Hathaway Inc. is in talks to buy a small stake in One97 Communications Ltd, the parent company of Indian payments leader, Paytm.

This would mark Berkshire Hathaway’s first investment in an Indian company.

Vijay Shekhar Sharma, Founder and CEO, Paytm

A Mint report suggested that that Paytm has been in talks with Berkshire Hathaway since early February to raise about ₹ 2,200- 2,500 crore ($300-350 million) at a valuation of about $10-12 billion.

The report also claimed that the investment is likely to be announced in the next two weeks.

A report in The Economic Times suggested that the stake to be picked by Berkshire Hathaway through this transaction, could be anywhere close to 3-4 percent.

At present, Alibaba and ANT Financial continue to be one of the biggest shareholders in One97 Communications with more than 40 percent stake in the entity, while Japanese conglomerate Softbank’s Vision Fund holds 20 percent stake in the entity. It also has SAIF Partners and MediaTek as investors.

In May last year, the company had announced raising $1.4 billion in funds from Softbank Group Corp. In the last week of July, Softbank also announced that it had partnered with the Noida-based company as well as Yahoo Japan Corporation to launch payments service PayPay.

Rapid expansion

The announcement comes at a time when Paytm is looking at rapid expansion, across sectors. However, industry experts claim that the activity is more in line with getting a strategic investor like Berkshire Hathaway on board.

With an aim towards becoming a financial services major, Paytm is looking at lending, setting up general and life insurance subsidiaries and launching its wealth management product, Paytm Money in the coming month.

Paytm Money has already received more than 700,000 sign ups for its product.

In the past, Berkshire Hathaway reportedly partnered with Bajaj Allianz to sell insurance in the country.

Recently, Paytm also announced its entry in to the SaaS services space, launching Paytm AI Cloud for India in partnership with investor Alibaba. It had also invested $16 million in its mobile entertainment joint venture Gamepind, which started in January this year along with AG Tech.

Under its Payments Bank, Paytm also announced the launch of its Forex service for money exchanges in 20 top international currencies.

Last month, Paytm had stated that it had achieved an annual run rate of 5 billion transactions, and $50 billion in GTV (Gross Transaction Value). It had also shared that 50 percent of these transactions were fuelled by users in Tier II and Tier III cities.

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