Chennai: Berkshire Hathaway Inc, the company chaired by one of the world’s richest man, Warren Buffet, has bought stakes worth Rs 2,500 crore in Paytm’s parent firm- One97 Communications, marking the conglomerate foray into India and the financial payments industry.
Warren Buffett’s assistant, Debbie Bosanek, confirmed Berkshire’s investment in India’s One97 Communications Ltd in an email.
“A number of people have inquired about whether Berkshire had made an investment in One97 Communications, the parent company of Paytm. This is to confirm the investment was made and that it was not a transaction in which Mr Buffett was involved,” said Debbie Bosanek.
On Sunday, reports emerged that Berkshire Hathaway was in talks to invest about Rs 2,000-2,500 crore in One97 Communications, that could value the company at $10 billion. One97 Communications already counts Chinas Alibaba Group Holdings and Japans Softbank among its major investors.
Sources say that the investment is being led by Todd Combs, one of Buffett’s key investment deputies and a fund manager at Berkshire.
He is also a contender for the CIO position at the firm. It has been a busy year for Combs, who has also been heading Berkshire’s efforts to start a healthcare joint venture with Amazon.com Inc and JPMorgan Chase & Co.
Deal heats up competition
This investment is expected to help Paytm strengthen its market leadership against Flipkart-owned PhonePe and Googles Tez besides potential competition from Facebook-owned WhatsApp and Reliance Jio.
Paytm founder Vijay Shekhar Sharma had also started an e-commerce business- Paytm Mall that competes with giants like Amazon and Walmart-backed Flipkart.
Paytm was earlier valued at around $7 billion last year when it raised $1 billion from Softbank Vision Fund and around $10 billion earlier this year during a secondary share sale by employees of the company.
Paytm has been one of the prominent beneficiaries of the governments move in November 2016 to scrap high denomination notes. It has seen manifold growth in transactions on its platform as well as expansion in number of users.
Berkshire Hathway had earlier forayed into India in 2011 as a corporate agent of Bajaj Allianz General.
However, it exited the market two years later owing to lack of profitability and laws that constrained ownership by foreign companies. While several Berkshire portfolio companies have operations in India, it had not made any direct investments until now.
| The big deal |
| The transaction was discussed at the board meeting a few weeks ago.
The development comes as Paytm is diversifying its business across financial services, e-commerce and offline payments Paytm counts Alibaba Group Holdings and SoftBank as major backers. It will help Paytm strengthen its market leadership against Flipkart-owned PhonePe and Googles Tez. |