BRK.A Berkshire Hathaway Inc

By Newley Purnell and Nicole Friedman 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 28, 2018).

NEW DELHI -- Warren Buffett's Berkshire Hathaway Inc. is getting into the mobile-payments business.

The Omaha, Neb., conglomerate said Monday it invested in One97 Communications Ltd., the parent company of Paytm. The Noida, India-based company is India's largest mobile-payments firm. It makes a popular smartphone app that can be used to pay for everything from movie tickets to auto-rickshaw rides.

Mr. Buffett's assistant Debbie Bosanek said that Mr. Buffett wasn't involved in the deal. She didn't immediately confirm the size of the investment. Berkshire was in talks to invest 20 billion to 25 billion rupees ($285 million to $357 million), according to a person familiar with the matter.

Paytm, which says it has more than 300 million users, saw its usage skyrocket in 2016 when India's government nullified its largest-denomination notes, a bid to root out tax evasion and corruption that triggered a cash shortage.

India now has 390 million internet users, more than the U.S. and second only to China, according to a report last month from consultancy Bain & Co. Global tech titans are rushing to tap into the South Asian nation's internet economy, which is growing quickly as smartphone and mobile data prices fall and hundreds of millions of people get online for the first time.

Paytm last year raised $1.4 billion from Japan's SoftBank Group Corp. Earlier investors include Chinese tech giant Alibaba Group Holding Ltd. and its financial-services affiliate, Ant Financial Services Group.

A SoftBank spokeswoman in India declined to comment

A spokesman for Ant Financial said earlier Monday that the company doesn't comment on "market rumors."

An investment of 20 billion to 25 billion rupees would give Berkshire a 3% to 4% stake in Paytm's parent, according to the person familiar with the matter. That would give Paytm, which isn't profitable, a valuation of more than $10 billion, up from more than $7 billion when it raised funds from SoftBank last year.

Berkshire portfolio manager Todd Combs is handling the deal, according to the person. He is one of four executives, including India-born Ajit Jain, who the 87-year-old Mr. Buffett has said handle many day-to-day responsibilities in running the firm.

Berkshire, which runs a large insurance operation and has businesses ranging from retail to railroads, has been searching for profitable ways to spend its more than $100 billion in cash. Among its biggest stockholdings is Apple Inc. As of June 30, Berkshire was Apple's second-largest shareholder after Vanguard Group, holding roughly 5% of the tech giant's stock.

Mr. Buffett earlier this year offered to invest in Uber Technologies Inc., but the two sides couldn't agree on the terms, he confirmed in June.

Berkshire made its maiden India venture in 2011, launching an online insurance distributor that sells Bajaj Allianz General's products.

"If you'll tell me a wonderful company in India that might be available for sale, I'll be there tomorrow," Mr. Buffett said last year in an interview with an Indian television news outlet. "I think the potential for India is incredible," he said. "It's a lot of people, a lot of buying power."

Still, asked about his insurance partnership he said, "Sometimes there have been restrictive laws in terms of the percentage we could own, and that's a disadvantage. We would like to own 100% of any business we run."

Paytm "has the capability of becoming a Tencent, and they have time on their hands," said Satish Meena, an analyst at Forrester Research, referring to Chinese internet behemoth Tencent Holdings Ltd.

Mr. Meena said Patym could benefit from not just Berkshire's cash, but from their vast expertise, as the Indian firm is eager to move beyond mobile payments and offer services such as insurance.

--Liza Lin contributed to this article.

Write to Newley Purnell at newley.purnell @wsj.com and Nicole Friedman at nicole.friedman@wsj.com

(END) Dow Jones Newswires

August 28, 2018 02:47 ET (06:47 GMT)

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