Berkshire Hathaway, the investment firm run by billionaire Warren Buffett, is on the verge of buying a small stake in Indian finance-technology company One97 Communications Ltd, the parent company of Paytm. According to a report by Livemint, Berkshire Hathaway could buy about $350 million (Rs 2,500 crore approximately) in stake at a valuation of $10-12 billion (about a 3 percent stake). The talks have been on since February, and are likely to be concluded soon.
If true, this will be Warren Buffett and Berkshire Hathaway’s first investment in an Indian company, and putting money into Paytm means that the legendary investor is betting big on online payment services and e-commerce in India, both of which Paytm is a large part of. Paytm’s online payments system gained massively right after the Government of India’s demonetization policy in late 2016, as users looked to online and cashless payments in the wake of widespread cash shortages.
Paytm currently remains privately held, and it will also be Berkshire Hathaway’s first investment in a privately held technology company. Other notable investments by the company include a large stake in Apple, which recently became the world’s first $1 trillion company by market capitalization. Warren Buffett’s leadership of Berkshire Hathaway and skilled investing have made him one of the richest people in the world.
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Founded in 2000 by Vijay Shekhar Sharma, Paytm also has Japan’s Softbank Group and China’s Alibaba group as investors. Apart from its online payments system and payments bank, Paytm’s parent company One97 Communications also runs Paytm Mall, an e-commerce platform that rivals Amazon and Flipkart in India. The deal could be announced soon, and will bring in much-needed capital for Paytm to continue expanding its payments bank, mobile wallet and e-commerce operations.