FinTech: Berkshire Could Romp Home With 60% Gains In Paytm’s IPO

July 16, 2021 | FinTech, News, Venture Capital
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A Reuters report said Paytm, a leading Indian digital payments processor, has filed for a $2.23 billion IPO.

The proposed IPO would value Paytm at about $25 billion, with the pandemic having fuelled a surge in digital payments in the country. It would potentially mark a lucrative payday for Paytm’s investors, which include the Ant Group (HK: 6688), Softbank (TYO: 9984), and Berkshire Hathaway (NYSE: BRK.A). (Reuters)

The Paytm listing would be one of the largest stock market listings in India. It would come at a time when the Indian stock market is ruling at elevated levels despite concerns from the pandemic. An IPO by Indian online food delivery platform Zomato, aiming to raise Rupees 9375 crores ($1.26 billion)  was subscribed 38.25 times on its final day today.

Paytm, a subsidiary of One97 Communications, was founded by Vijay Shekhar Sharma in 2010. It has graduated from digital payments to a financial supermarket that sells insurance, gold sales, tickets to entertainment, bank deposits and remittances, even IPOs.

Its IPO is likely to be well-received.

“Companies within the digital space have good growth potential because of the increase in the number of internet users and wide access among the youth,” Ajit Mishra, vice president of research at Religare Broking in Noida, told Reuters.

Buffett to rake in 60%

If the IPO goes through as anticipated, Warren Buffett’s Berkshire Hathaway stands to make a 60% profit on the amount of $300 million that it invested in Paytm in August 2018, according to Markets Insider. The deal was reportedly a brainchild of Buffett’s  deputy Todd Combs.

Berkshire currently owns 17 million shares, or a 2.8% stake, in Paytm.

Some of the existing investors such as Berkshire, Softbank, Alibaba and Ant Financial will get to sell parts of their holdings in the IPO, though the amounts have not been disclosed.

Related Story:  Zomato’s Pre-IPO Raise Nabs $250M At $5.4B Valuation                                                 

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