Berkshire Hathaway takes stake in Paytm

By Trevor Hunnicutt and Sankalp Phartiyal

NEW YORK/MUMBAI (Reuters) - Berkshire Hathaway Inc has picked up a 25 billion rupees ($356 million) stake in the parent of digital payments firm Paytm, a source said, its first investment in an Indian startup as it forays into the financial payments sector.

The conglomerate run by billionaire Warren Buffett confirmed in an email that Berkshire had invested in One97 Communications Ltd. Buffett was not involved in the transaction, his assistant Debbie Bosanek said in the email, without giving more details.

India's Economic Times had reported on Monday that Berkshire was in talks for a 3-4 percent stake in a deal valuing Paytm at more than $10 billion, citing people familiar with the matter.

The investment is a huge endorsement for Paytm that has grown to become India's leading digital payments platform in just eight years of its operation.

For Berkshire, this marks a rare shift in its strategy. Buffett has traditionally invested in companies from sectors such as consumer, energy and insurance.

The conglomerate is under pressure to find investments and whittle down a $108.6 billion stockpile of cash.

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 key investment deputies, Todd Combs, who is seen as a potential chief investment officer at Berkshire, is leading the Paytm deal, the Economic Times reported.

It has been a busy year for Combs, who has also been heading Berkshire's efforts to start a healthcare joint venture with Amazon.com Inc and JPMorgan Chase & Co.

Paytm, founded by Vijay Shekhar Sharma in 2010, counts China's Alibaba Group and its financial services arm Ant Financial Services Group among its 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.

Japan's SoftBank also became a shareholder in May 2017, injecting $1.4 billion in Paytm's parent company for a 14.2 percent stake and some existing shares. That investment would value Paytm at about $7 billion.

One97 Communications and SoftBank did not respond to requests seeking comment. A spokeswoman for Alibaba referred Reuters requests to Paytm.

($1 = 70.16 Indian rupees)

(Reporting by Trevor Hunnicutt in New York, Sankalp Phartiyal in Mumbai and Kane Wu in Hong Kong; Additional reporting by Brenda Goh in Shanghai, Mekhla Raina in Bengaluru; Editing by Gopakumar Warrier, Steve Orlofsky and Himani Sarkar)