India’s largest digital payment services provider Paytm, owned by One97 Communications Ltd, said that the fintech startup has raised an undisclosed amount from Warren Buffett-owned Berkshire Hathaway Inc. Berkshire’s investment manager Todd Combs, who was leading the investment discussions with Paytm, will be joining the board of One97 Communications. It is reported that Buffett’s Berkshire Hathaway Inc. will buy a 3-4% stake for £220-250 million in One97, making it the billionaire investor’s first investment in an Indian company. The current round pegs Paytm’s valuation at about $10-$12 billion. The Omaha, Nebraska-based Berkshire has steered away from making any investments in India till now. This is not just Berkshire’s first investment in the country’s buzzing startup ecosystem; it is also the company’s first investment in a privately-held technology company in the world.
“I have been impressed by Paytm and am excited about being a part of its growth story, as it looks to transform payments and financial services in India,” said Todd Combs. While Berkshire Hathaway’s long term investment strategy in India remains still unclear, this deal marks a ringing endorsement of Paytm and India’s internet and tech ecosystem. “We feel both excited and humbled by this endorsement. Berkshire’s experience in financial services, and long-term investment horizon, is going to be a huge advantage in Paytm’s journey of bringing 500 million Indians to the mainstream economy through financial inclusion. It is my honour to welcome Todd to our board, where he will bring his wealth of experience to guide our management team,” said Paytm’s founder and CEO Vijay Shekhar Sharma.
Berkshire Hathaway joins a strong list of globally renowned investors, who have parked their money in Paytm. Some of the names include Japan’s SoftBank Group, China’s Alibaba Group and Ant Financial. It also counts SAIF Partners and MediaTek as investors. The news comes in at a time when India has turned into a battleground for winning the digital payments war. Over the past year, Paytm’s near-monopoly status in digital payments has been challenged by numerous players such as Google Pay, Amazon Pay, BHIM and Flipkart-owned PhonePe, while newer players such as Whatsapp’s payments service are also expected to mount a significant challenge.
With this news, Paytm has effectively separated itself from the rest of the pack. Paytm 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. Founded by Sharma in 2000, One97 started out as a mobile payments and mobile recharge business and currently ranks among the top three consumer internet companies in India. The company has created a host of payment solutions where consumers can transact via the Paytm digital wallet and Paytm Payments Bank. In the last two years, Paytm has also aggressively built its e-commerce marketplace by selling consumer goods, apparel, footwear, smartphones, bus tickets and movie tickets.
