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Warren Buffett’s Firm To Invest $300m In Indian Payments Company Paytm

Warren Buffett’s Firm To Invest $300m In Indian Payments Company Paytm
According to media report citing sources with knowledge of the matter, at least $300 million is to be invested in the parent company of India’s largest mobile payments group, Paytm, by Warren Buffett’s Berkshire Hathaway.
This investment planned to be made in One97 Communications would be the largest investment in the south Asian country by Buffett’s company. This investment is also reflective of the growing level of comfort that the billionaire investor now feels with new technology and payments companies especially after having invested in Visa and Apple through his holding firm.
One of the sources reportedly told the media that dependent on the performance of the Indian online payment app, the level of investment in the company could be increased by Berkshire.
Investors in Asia have already shown a keen interest in the payment app company which was founded by 40-year-old Vijay Shekhar Sharma. The Indian company has already been funded and invested in by Japanese investment group SoftBank and Chinese ecommerce giant Alibaba. Mobile payments, bill payments and has recently opened an online marketplace are among the services that the Indian company currently offers.
The success of Paytm in India is in line with the fast growth of other digital payment platforms throughout Asia and the market has bene led by Alibaba’s Alipay and WeChat from its rival Tencent. After establishing themselves, these two Chinese companies themselves have become investors in other payments, internet and online shopping businesses in the Asian region.
Technology has historically never been a favoured investment destination for Buffett. He refrained from making any significant investments in tech stocks even at the turn of the new millennium when the doctom boom was at its peak. The reason is that he claimed he had no understanding of their business model.
In the recent years however, Buffett completely pulled out his investment in IBM and made a big investment in Apple. One of the key reasons for investing in Paytm is that Buffett sees a lot of growth opportunities by investing in the mobile and cashless economy industry in India which is growing fast, said a source briefed about the transaction.
Analysts are of the opinion that now is the right time to invest in the payments industry in India. In late 2016m about 86 per cent of the country’s cash was removed from circulation by Prime minister Narendra Modi. For digital payment companies such as Paytm, that was a big booster. foreign companies such as Amazon, Facebook and Google are now giving competition to domestic online payment platforms.
A leading Indian ecommerce company Flipkart was infused with an investment of $16 billion earlier in the year by Walmart acquiring a majority stake. That marked the largest foreign direct investment in India. for Flipkart, Amazon is the currently the closest rival in the Indian market after the US e-retailing giant expanded its own business in the country.
Paytm had bene crowned amongst the most valuable startup last year at a valuation of $10bn.

Christopher J. Mitchell

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