This will be Berkshire’s first direct investment in India and its first investment in a privately held technology company in the world.

Warren Buffetts Berkshire Hathaway in talks to invest Rs 2000 crore in PaytmImage source: Fortune Live Media via Flickr
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After attracting investment from global investment majors such as SoftBank and Alibaba, Paytm is now in talks with Warren Buffett’s Berkshire Hathaway to raise Rs 2,000-2,500 crore. This will be Warren Buffet’s first direct investment in India.

According to a report in Economic Times, Berkshire is likely to pick up 3-4% stake in Paytm through a primary subscription of shares. The deal would value Paytm at over $10 billion.

After raising $1 billion from SoftBank earlier this year, Paytm’s valuation rose to around $7 billion, which reportedly grew to $10 billion following a secondary share sale by employees of the company.

Being the first, this investment is a testament to the potential Buffet sees in India given that he has never invested in any technology company in the past. This is his first investment in a privately held technology company, even though Paytm still incurs losses.

According to Mint, Berkshire Hathaway has selectively invested in a few publicly listed tech companies such as IBM and Apple. While it recently exited IBM, it still remains invested in Apple.

“Berkshire Hathaway is impressed by the scale that Paytm has been able to build in a short period of time. They realise that technology companies go through a cycle of losses before they start generating cash,” ET quotes a source as saying.

While Paytm has not commented on the investment, Berkshire Hathaway confirmed to ET Now on Monday it made an investment in Paytm’s parent One97 Communications but clarified that it was not a transaction in which Warren Buffett was involved.

One97 communications (Paytm’s parent), founded by Vijay Shekhar Sharma in 2000, has grown to become one of the largest internet companies in India and has grown from being a mobile recharge business to a digital payments major with various arms such as a payments bank, an e-commerce arm, ticketing business, among others.

 ET reports that Paytm sees 5 billion transactions worth $50 billion in gross transaction value (GTV) on an annualised basis based on its performance in June.

As on FY17, its income stood at Rs 828 crore, an increase of 38% while its losses stood at Rs 899.6 crore.

Paytm is now betting big on the personal finance space with the launch of Paytm Money, which will offer savings instruments such as mutual funds and insurance as well.  

Also read: Myntra to open offline cosmetic stores in Bengaluru

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