This week brought us the news about Berkshire’s investment in One97 Communications for 3-4% stake which values the Paytm’s parent company at over $10 Billion. According to Credit Suisse’s report, India’s digital payments volume is forecasted to increase from $200 billion now, to over $1 trillion by 2023.
Even though Warren Buffet is not directly involved with the proposed investment, he has been considering exposure to India (Berkshire had a 2 year stint with Bajaj Allianz General in 2011). However, from Berkshire’s perspective, the $300-400 million investment in Unicorn Startup Paytm forms an inconsequential share of their cash reserves (0.3% of their $110 billion dollar cash reserves). Berkshire Hathaway has changed its stance of avoiding investments in technology companies starting with IBM in 2011 and gaining a shareholding of about 5% in Apple over the last two years.
Demonetisation and the gradual formalization of the economy are helping Paytm to catapult towards becoming a major player in the market. The narrative of Chinese influence which Paytm operated under will dilute, now that there is an American giant on the board. This week brought us the news about Berkshire’s investment in One97 Communications for 3-4% stake which values the Paytm’s parent company at over $10 Billion....
