Tags: buffett | berkshire | financial | tech | 600 million dollars

WSJ: Buffett's Berkshire Invests $600 Million in 2 Financial-Tech Firms

fintech investment. man working and graph and business technology on laptop screen.
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By    |   Monday, 29 October 2018 11:55 AM

Warren Buffett’s Berkshire Hathaway Inc. reportedly is hopping on the fintech bandwagon.

The move is a departure from company’s usual penchant for blue-chip companies in steady businesses, The Wall Street Journal reported.

Berkshire invested around $600 million in recent months in two big financial-technology companies focused on emerging markets, the Journal reported.

The Journal identified the companies as Brazilian payment processor StoneCo. Ltd. and the parent company of India’s largest mobile-payments service, Paytm.

Fintech develops and offers personalized financial services like payments, loans and insurance via smartphones or the internet, providing consumers with alternatives to high street banks, Reuters explained.

Berkshire, which is under pressure to find investments and whittle down a $108.6 billion stockpile of cash, this marks a rare shift in strategy. Buffett has traditionally invested in consumer, energy and insurance companies, Reuters has reported.

The foray into India’s ultra-competitive digital payments space is not without risks. The market is expected to grow five-fold to $1 trillion by 2023, but rivalry is intense, with several players - including the state-backed Unified Payment Interface (UPI), in the fray.

Unlike digital wallets, which do not earn users any interest, UPI apps simplify interbank transfers, making it a preferred option for some.

Paytm and other mobile wallet companies have been forced to offer more services to retain customers.

In May, Buffett had indicated an interest in the financial payments industry at an annual shareholders meeting, saying the sector was a huge deal around the world and that many companies were working to reinvent the space.

One of Buffett’s investment deputies, Todd Combs, seen as a potential chief investment officer at Berkshire, led the deals and has been given a seat on its board, the company said. 

Combs has also led Berkshire’s efforts to start a healthcare joint venture with Amazon.com Inc. (AMZN.O) and JPMorgan Chase & Co. (JPM.N).

Paytm, founded by Vijay Shekhar Sharma in 2010, counts China’s Alibaba Group (BABA.N) and its financial services arm Ant Financial Services Group among investors.

Alibaba and Ant Financial, which runs China’s top payment system Alipay, jointly own about 40 percent of Paytm’s parent after an investment in September 2015, Reuters has reported.

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Warren Buffett’s Berkshire Hathaway Inc. reportedly is hopping on the fintech bandwagon.
buffett, berkshire, financial, tech, 600 million dollars
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2018-55-29
Monday, 29 October 2018 11:55 AM
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