Buffett set to buy into Paytm parent One97 Communications

According to a report in the Mint news paper, Buffett’s investment firm Berkshire Hathaway has been in talks with the Vijay Shekhar Sharma-led Paytm for the past few months and a deal is likely soon. The report said One97 Communications expects to raise about $300-350 million in the transaction.

The deal values the Paytm group at $10-12 billion, indicating that Buffett is likely to buy a little over 3 per cent in One97 Communications.

Paytm, a local start-up, which began operations in 2010, has seen tumultuous growth and is now the leading digital payments and e-commerce firm in India. It recently got a payments bank licence and has started operations. 

Paytm’s key investors include Softbank, SAIF Partners, Alibaba Group and Ant Financial. Recently Paytm also innovated with selling investment products like gold and mutual funds through their network.

The deal, if concluded, will be the first transaction by Warren Buffett in the Indian start-up universe.

The development comes at a time when Paytm is entering the cloud business to support developers, startups, and enterprises. It is also planning to launch its financial product platform Paytm Money soon.

The investment will position Paytm in a better position to fight competition in the digital payments space from rivals such as Flipkart’s PhonePe, Google’s Tez and Facebook-owned WhatsApp.

Buffet has so far refrained himself from Indian internet companies, which are growing by leaps and bounds.

It is to be seen how US and Chinese investors get along in the Vijay Shekhar Sharma-led company.

Berkshire Hathway entered the Indian market in 2011 in partnership with Bajaj Allianz to sell insurance. That flopped and the company exited two years later.

Although several Berkshire portfolio companies have operations in India, Berkshire is yet to make any direct investment in Indian companies.