New Delhi: Warren Buffett’s Berkshire Hathaway is in talks to buy a small stake in One97 Communications, the parent of Paytm, in what could be the first direct investment in the country’s buzzing startup by the legendary investor, according to media reports.
Paytm, India’s largest payment services provider, has been in talks with Berkshire Hathaway since early February to raise about Rs 2,200-2,500 crore ($300-350 million) at a valuation of about $10-12 billion, reported business daily Mint quoting two unnamed sources.
Paytm already has a strong capital table with a bunch of globally renowned investors such as Japan’s SoftBank Group, China’s Alibaba Group and Ant Financial. SAIF Partners and MediaTek are also its investors.
The development comes as Paytm has also been diversifying its business across financial services and offline payments after acquiring customers through services such as mobile recharges, rail and air bookings, movie ticketing and utility bill payments. Through One97 Communications, the company owns 49% in Paytm Payments Bank with the remaining stake held by Sharma in his personal capacity as per regulations.
It will also be the Berkshire Hathway’s first investment in a privately-held technology company in the world. In the past, it has invested in some publicly listed tech companies, most notably International Business Machines (IBM) Corp. and Apple. However, Berkshire recently exited IBM, but still owns Apple stock.
The Oracle of Omaha, as Buffett is called, did make his foray into country by setting up Berkshire India in 2011 and partnered with Bajaj Allianz to sell insurance. However, citing excessive regulation, it exited the partnership two years later, said a CNN report.
The Noida-based Paytm said last month that it conducts 5 billion transactions worth $50 billion in gross transaction value (GTV) on an annualised 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.
Paytm was 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.
Earlier this year, Buffett confirmed that his firm tried to invest in ride-hailing giant Uber.
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