Paytm confirms Warren Buffet's bid to buy stakes

Expecting around Rs 3000 crore investment

One97 Communications, Paytm's parent company, on Tuesday, confirmed that Warren Buffett’s Berkshire Hathaway is all set to pick up 3%-4% stake by infusing around Rs 3000 crore.

A top Paytm official who is privy to the development told DH that the investment will happen soon with all the regulatory approvals. It will be through a primary subscription of shares.

Berkshire Hathaway, which has already invested in multiple companies in India via various investee companies, is going for its first direct investment in the country through Paytm.

Paytm is now into mobile payments and online financial services. The move will further strengthen the companies global expansion strategies, especially in the North-America region.

According to sources, the investment was discussed at the board meeting of Vijay Shekhar Sharma-promoted Paytm a few weeks ago.

In a recent interaction with DH, Sharma said his vision is to bring on board more customers from around the globe to the Paytm platform. "The financial and e-commerce business are our ways to bring on board customers. We would like to be known as a technology company resolving citizen problems in India first and then go global," he said.

Paytm was founded in August 2010 with an initial investment of $2 million by Sharma. It started off as a prepaid mobile and DTH recharge platform and later added data card, postpaid mobile and landline bill payments in 2013.

If the investment from Buffet is through, it will give Paytm more ammunition to strengthen its market leadership against Flipkart-owned Phonepe and Google’s Tez besides potential competition from Facebook-owned WhatsApp and Reliance Jio.

As per regulatory filings, One97 Communications owns 49% in Paytm Payments Bank with the remaining stake held by Sharma in his personal capacity. The company's major investors include China’s Alibaba Group Holdings and Japan’s Soft-Bank as major backers.

One97 Communications Ltd, the parent entity that owns brand Paytm, formed the e-commerce business into a new mobile application and a separate website in February 2017.

As per regulatory filings for 2017 fiscal with the Registrar of Companies, Sharma, who held over 19% stake in Paytm Mall, now owns about 14% stake.

The company is valued at $10 billion in January 2018 and is rapidly expanding its portfolio from just digital payments to e-commerce with Mall and has also ventured into event ticketing services, wealth management, insurance segment and gold services.

Paytm claims it has achieved an annual run rate of 5 billion transactions and $50 billion in gross transaction value (GTV), a result of the phenomenal adoption of its services in Tier-II and Tier-III cities.

The filings of the company state that its total revenue for FY17 stood at Rs 828.6 crore, which is a 38.6% increase against FY16 revenues of Rs 597.8 crore. The company's losses had reached Rs 1,496.7 crore in FY16 and then touched Rs 899.6 crore for FY17, a 39% low from the previous year.

Sharma recently pledged about 5% of his personal holding in Paytm Mall for the ESOP pool. He also plans to go for listing by 2020.