Paytm might be Warren Buffett's first direct investment in India

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  • The Oracle of Omaha is in talks to invest upto ₹25 billion ($360 million) in One97 Communications, the parent company of Paytm.
  • The deal involves the purchase of a 3-4% stake in the company by Berkshire Hathaway, the financial services conglomerate owned by Buffett.
  • As of June 2018, Paytm was reported to be conducting $50 billion worth of transactions, in gross value terms, on an annual basis.
The Oracle of Omaha is readying his first big move in India. According to insider sources, Warren Buffett is in talks to invest upto ₹25 billion ($360 million) in One97 Communications, the parent company of online payments and digital wallet service Paytm. The deal involves the purchase of a 3-4% stake in the company by Berkshire Hathaway, the financial services conglomerate owned by Buffett.

Digital payments are a burgeoning space in India and Buffett is looking to get in as the market heats up, despite the fact that Paytm is still generating losses. Currently estimated to be $200 billion in size, the digital payments market in India is predicted to reach $1 trillion by 2023.

As of June 2018, Paytm was reported to be conducting $50 billion worth of transactions, in gross value terms, on an annual basis. After starting operations as a digital wallet, the company has expanded into a number of segments such as e-commerce, ticketing, investing and insurance.

First investment in India

While it might seem likes it’s been a long time coming, Warren Buffett’s first direct investment in India didn’t always seem like a possibility. Following the failure of Berkshire’s online insurance partnership with Bajaj Allianz in 2013, Buffett had been vocal about red tape and laws preventing foreign ownership in India. He did, however maintain, as per an interview with ET Now last year, that the country had “tremendous potential”, and explained he would be open to making an investment in the right company.

A deal with One97 Communications could be reached in the coming weeks. Till date, Paytm has raised about $2 billion in funding. It counts Alibaba, Ant Financial and Softbank among its major owners, which together account for about a 60% stake in the company.

If the talks with Berkshire Hathaway are successful, the valuation of Paytm, which entered the unicorn club last year with a $200 million funding round led by Alibaba, could go past the $10 billion mark. More importantly, it will also mark Warren Buffett’s first investment in a private technology company. Berkshire is a major investor in Apple, which is publicly-listed.
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