Berkshire Hathaway giving huge ‘Buff-et’ to Paytm
The global giants continue to see India as one of the brightest business spots across the globe for assorted investments. The latest deal is certainly going to become a talk of the town for many days to come. We are talking about none other but the much hyped and talked about deal between Berkshire Hathaway and Paytm. This deal is certainly going to bring Mr Vijay Shekhar Sharma, founder of Paytm, on cloud nine. Paytm has absolutely got a reason to brag about. Taking into consideration the unending loss of Paytm, for last couple of years, this bargain has given the company a huge boost needed. Paytm witnessed favour huge amount of losses in recent years despite the fact that demonetization worked immensely in favor of the company. In the financial year 2016-17, it went on to spend 969 crore on advertising and promotion which generated revenue of a mere 829 crore. Prior to that year, the company spent 1347 crore to generate a revenue of 598 crore.
Having counted its losses, it is certainly no less than a miracle that Paytm got such a big company as its investor. One97 Communications, the parent company of Paytm, has been quite persuasive to add third globally-acclaimed investor in its kitty apart from Jack Ma owned Alibaba and Masayoshi Son owned Softbank. As Berkshire is not prone to investing in technology, its deal with Paytm came as an aberration for many. Its founder Mr Buffet is well known for staying away from investing in technology. He usually invests in sectors such as consumer, energy and insurance. But this sudden change of perception has simply blown the trade pundits. In May this year, Warren Buffet had given hint of his new found interest in the financial payments industry. He stated that the sector is turning into a money-magnet across the globe. He was just following the trend. Berkshire knows the fact that India is a great market and discounting in the initial functioning of the company can be tolerated.
This good news for Paytm came at a time when Paytm was facing fierce competition in India’s digital payment space. Some of those peers include Google Pay, WhatsApp Payments and other large-scale alternatives. Mr. Vijay Shekhar Sharma has gained a new energy and motivation from this investment which is scaled at $356 million. He is hopeful of generating requisite cash flows. Berkshire and Paytm’s other supporters are optimistic about its aggressive customer acquisition strategy. They are sanguine that the plan would eventually pay off when it’s platform is used for assorted financial services. Paytm is certainly going to remember this deal in the times to come as Berkshire is not one of those who stay satiated with small chunks. It will look for big pies in its shareholding once it start seeing benefits.