The billionaire investor's Berkshire Hathaway Inc. (BRK.B) is reportedly in talks to buy a small stake in One97 Communications Ltd. The company's flagship brand, Paytm, operates India's largest digital wallet.
According to two sources speaking with Mint, Berkshire has been in talks with the One97 since early February to raise about $300 million-$350 million at a valuation of about $10 million-$12 billion. The deal is expected to be announced in the next two weeks.
The Economic Times reported that Berkshire is looking to pick up a 3-4% stake in the company for about $285.4 million-$356.7 million, and the deal is being done through a primary subscription of shares.
If the deal goes through, it will be Berkshire's first investment in a privately-held technology company, noted Mint. (See also: How Berkshire Should Prepare for Life After Buffett)
Mobile payments company Paytm was founded in 2000 but gained prominence in November 2016 when the Indian government took the controversial decision to demonetize Rs. 500 and Rs. 1000 currency notes. Due to severe shortages in the cash-dependent nation, many Indians took to doing transactions digitally for the first time. Paytm's user base soared from 140 million in October 2016 to 270 million in November 2017. It now claims to serve 300 million registered users. Its revenue grew 38.6% to $118 million in FY 2017, and it trimmed its net loss by 39% to $128.9 million during the same period.
One97's largest shareholders include Chinese tech giant Alibaba Group Holding (BABA), Japan’s SoftBank Group, China’s Ant Financial, SAIF Partners and MediaTek.
Last month reports said Paytm was in talks with U.S. investors and SoftBank to raise $300 million-$500 million to boost its hyperlocal online-to-offline business. “Paytm wants to enable same-city commerce and help restaurants, grocery stores and pharmacies grow their walk-ins through offers and deals. We have already tied up with 4,500-5,000 merchants," Paytm founder & CEO Vijay Shekhar Sharma told The Economic Times.
One97's brands compete with global entities like PayPal Holdings Inc. (PYPL), Amazon.com Inc. (AMZN) and Google's (GOOGL) India payments app Tez. Facebook Inc.'s (FB) WhatsApp also began testing a payment service in the country this year. (See also: Morgan Stanley Thinks Berkshire Should Buy This Airline)