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Warren Buffett Set to Buy Stake in Indian Digital Payments Firm Paytm

Warren Buffett

American billionaire investor Warren Buffett’s Berkshire Hathaway is reportedly set to buy stake in One97 Communications, the parent firm of Indian digital payments service provider Paytm. If it materializes, the investment, said to be worth about Rs 20-25 billion ($285.4-356.7 million), would be Buffett’s first direct investment in India.

Berkshire Hathaway will pick up a 3-4 percent share in the Indian firm at a valuation of about $10 billion, the Economic Times reported, citing two persons familiar with the development.

The deal is likely to take place in the coming days, the publication added. “Berkshire is in talks to pick up a 3-4% stake in the company and it is being done through a primary subscription of shares,” the publication quoted a source as saying.

Paytm, founded by Vijay Shekhar Sharma in 2000, currently ranks among the top three consumer internet companies in India. It is already backed by leading global investors such as China’s Alibaba Group and Japan’s SoftBank group, besides SAIF Partners and MediaTek.

“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,” ET quoted another person familiar with the proceedings of the deal as saying.

The transaction is being led by Todd Combs, known as a key fund managers at Berkshire, and seen as a potential chief investment officer at the company, the report added.

Berkshire Hathaway, which had consciously kept away from investing in technology companies until a few years back, now owns a huge share in Apple, which at $10 billion is the company’s largest holding.

Buffett, known as the Oracle of Omaha, has expressed confidence in the Indian business scenario earlier, saying during a television interview last year that “the potential for India is incredible.” Describing India as an “enormous” market, Buffett said: “If you tell me a wonderful company in India that might be available for sale, I’ll be there tomorrow.”

Paytm said last month that it touched $50 billion in annual gross transaction value (GTV). The Noida-based company has been diversifying its business by establishing its e-commerce platform that offers movie tickets, rail and air bookings and more. Paytm Mall earlier this year raised $445 million from Japan’s SoftBank and Chinese e-commerce company Alibaba, increasing its valuation to $1.9 billion.