Since February this year, India’s biggest payment service provider Paytm has been in negotiation with Berkshire Hathaway to raise around ₹2,200 – 2,500 crore at a valuation of around $10 – 12 billion. Now, in the latest development, the company seems to be getting what it has been working towards.
The New Investment
According to a couple of reliable sources on the promise of anonymity said that, Berkshire Hathaway Inc. is about to purchase a small share in Paytm’s parent company One97 Communication Ltd. This purchase would be marked as Warren Buffett’s first backing of an Indian company. Warren Buffett and Paytm have been discussing terms of the agreement regarding an investment value of $300-350 million at a valuation of $10-12 billion.
Within the next couple of weeks, news of the foreign congolromete’s investment in India’s electric startup ecosystem will hit the stand. Not only that but this will be the company’s first ever investment in a privately held tech company in the world. Until recently, Buffett had invested only in public ltd tech companies like IBM and Apple. Even though Buffett has now withdrawn his investment in IBM, he still owns shares of Apple.
Previous Investment Attempts
According to several news reports, Berkshire Hathaway had earlier in May, unsuccessfully tried to invest in cab-for-hire firm Uber. According to a report by CNN, Oracle of Omaha, Buffett, had set up Berkshire India with Bajaj Allianz in 2011 to sell insurance. But had soon exited that alliance within a couple of years of operations due to excessive regulations.
India has long awaited an investment from the world’s most revered investor. Berkshire Hathaway’s imminent deal with One97 Communication Ltd. will act as an endorsement to India’s tech and internet ecosystem. This partnership with Warren Buffett couldn’t have come at a better time especially since the start-up sector had been attracting skepticism and criticism because of its unsustainable financials and frothy valuations, for the past five or six years.
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Paytm’s Strong Capital Table
Launched in 2000 by Vijay Shekhar Sharma as a mobile recharge and payments business, it is currently placed in the top three customer internet companies in India. As a flagship digital payment solutions service provider, digi-wallet Paytm and Paytm Payments Bank were created by the company.
Paytm has quite a global capital backing with Japan’s SoftBank group and China’s Ant Financial and Alibaba Group, already a part of its capital table. MediaTek and SAIF Partners too have a stake in the digital payment service.
In July, Mint reported that for the quarter ended June, Paytm purported a gross monthly transaction of $4 billion. The volume of transactions hit an all-time high of 1.3 billion towards the end of the second quarter.
Paytm is also aggressively building its e-commerce market space by selling everything from a movie and bus tickets, to smartphones, to footwear and apparel, to consumer goods, on it. According to Mint, Paytm Mall is speculating that by March 2019, its annual gross sale would be around $10 billion. This ranks Paytm at third place in India’s e commerce environment, so soon after being launched only a year ago.
Paytm payments got a boost in its growth when the Government discontinued the big notes in 2016 November. Reserve Bank of India had issued 11 payment bank licenses, one of which Sharma received too. That’s how he could set up the Paytm Mall.
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The post PayTM to be the First Indian Company for Warren Buffet as Berkshire Hathaway Looks for a Small Slice of Stake appeared first on MySmartPrice.
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