Berkshire Hathaway Inc invested Rs 2500 crore ($356 million) in the Indian company behind digital payments firm Paytm, according to a source with direct knowledge of the deal, in a foray by the conglomerate into India and the financial payments industry.
Billionaire Chairman Warren Buffett's assistant, Debbie Bosanek, confirmed Berkshire's investment in India's One97 Communications Ltd in an email. She said Buffett was not involved in the transaction.
A section of the Indian media reported earlier on Monday that Berkshire was in talks to pick up a 3 percent to 4 percent stake in a deal potentially valuing Paytm at over $10 billion. The report cited people familiar with the matter.
One of Buffett's key investment deputies, Todd Combs, who is also seen as a potential chief investment officer at Berkshire, is leading the transaction, the newspaper reported. It has been a busy year for Combs, who has also been heading Berkshire's efforts to start a healthcare joint venture with Amazon.com Inc and JPMorgan Chase & Co.
In May, Buffett said at Berkshire's annual shareholders meeting that the financial payments industry is a huge deal around the world and that many companies are working to reinvent the industry.
His conglomerate, meanwhile, has been under pressure to find significant investments and whittle down a $108.6 billion stockpile of cash.
Paytm has a payments bank licence from Reserve Bank of India (RBI) unlike its immediate competitors in the venture capital funded sector.
Berkshire had last ventured into India in 2011 in the non-life insurance sector by tying up with Bajaj Allianz as a corporate agent. The partnership broke in 2013.
Japan's SoftBank and China's Alibaba Group are among the major backers of Paytm.
India's online retail market is expected to witness a huge growth in the coming years. Earlier this month, Flipkart sold majority stake to Walmart for a valuation of around $21 billion. Besides Flipkart, top five sectors including consumer, retail and fin-tech raised around $3.6 billion in venture capital funding just in the first half of 2018.
According to a recent research by eMarketer, the size of India's e-commerce industry would be around $32 billion by end-2018. This is expected to witness a whopping 120 percent growth by 2022 at $71 billion.
Flipkart is leading the online retail market race and is closely followed by Amazon; Paytm is next in the fray with offerings like payments, e-commerce, ticketing, travel, among others. Paytm was one of the biggest beneficiaries of the demonetisation drive initiated by Prime Minister Narendra Modi in 2016.