Warren Buffett’s Berkshire Hathaway Inc. is set to buy a small stake in One97 Communications Ltd, the parent of Paytm, making it the billionaire investor’s first investment in an Indian company, according to two people aware of the development.
Paytm, which is India’s largest payment services provider, has been in talks with Berkshire Hathaway since early February to raise about $300-350 million at a valuation of about $10-12 billion. The deal, which is likely to be announced within the next two weeks, will be Berkshire Hathaway’s first investment in the country’s buzzing startup ecosystem.
It will also be the company’s first investment in a privately-held technology company in the world. In the past, Berkshire Hathaway has selectively invested in some publicly listed tech companies, most notably International Business Machines (IBM) Corp. and Apple. Berkshire recently exited IBM, but still owns Apple stock.
Warren Buffett, known as the Oracle of Omaha, did set up Berkshire India in 2011 and partnered with Bajaj Allianz to sell insurance. However, Berkshire exited the partnership two years later, citing excessive regulation.
Paytm already has a strong capital table with globally renowned investors such as Japan’s SoftBank Group, China’s Alibaba Group, and Ant Financial. It also counts SAIF Partners and MediaTek as investors.
Founded by Vijay Shekhar Sharma in 2000, One97 started out as mobile payments and mobile recharge business and currently ranks among the top three consumer internet companies in the country. It claims to have touched $4 billion in monthly gross transaction value, with the number of transactions touching a peak of 1.3 billion in the quarter ended June.