BREAKING: Tech Expert Issues Bold Prediction
Small Maryland firm that predicted the rise of ecommerce, mobile payments and smartphones issue a new shocking prediction.
At Berkshire Hathaway’s (NYSE: BRK.A, BRK.B) 2018 annual shareholder meeting, Warren Buffett fessed up that he made a mistake by not investing in Amazon (NASDAQ: AMZN) and Google (NASDAQ: GOOGL, GOOG).
Now it seems Berkshire Hathaway doesn’t plan to make that mistake again.
On Monday, Berkshire announced that it had taken a stake in One97, the owner of India’s largest digital payments firm, Paytm.
While the details of deal have not been disclosed, reports say that Berkshire spent around $360 million on a 3-4% stake in Paytm, valuing the company at over $10 billion.
Paytm, which is already backed by Japan’s SoftBank and Chinese tech giant Alibaba (NYSE: BABA), is India’s largest mobile commerce platform.
Two years ago, Paytm saw a massive surge in traffic after India demonetized its high-value notes, amounting to 86% of the cash in circulation, in an effort to crackdown on the country’s shadow economy, forcing people to turn to cashless and digital payments.
Paytm had a user base of around 115 million before the demonetization, and has since crossed the 300 million user mark. The next closest e-wallet competitor in the country, MobiKwik, has around 100 million users.
The company also runs an e-commerce firm, Paytm Mall—the third largest e-commerce company in the country—as well as the Paytm Payments Bank. It’s also now getting into the cloud computing business.
These businesses are a good move for Paytm. India is the world’s fastest growing market and the rising penetration of smartphone and internet use there is playing a vital role in growth in the mobile payments, online shopping, and cloud sectors.
It also presents a massive growth opportunity for the company as the payments sector alone is expected to reach $1 trillion in India by 2023.
Such growth potential was enough to lure Berkshire Hathaway.
2011 marked Berkshire’s first foray into investing in India when it became a corporate agent for Bajaj Allianz General, which sold insurance packages online. Berkshire made an exit in 2013 due to excessive regulations and a dull consumer response. But that didn’t quiet Warren Buffett’s appetite for having a presence in the country.
In an interview with ET Now in May 2017, Buffett said “If you tell me a wonderful company in India might be available for sale, I’ll be there tomorrow,” adding that “the potential for India is incredible.”
As the leading digital payments company in India, Paytm has a powerful network effect, which will be difficult to compete against. And with Berkshire’s new investment, the growth prospects of these other companies may be significantly diminished in the country.