Market Overview

Buffett's Berkshire Hathaway Finds One Place To Deploy Cash Horde: Fintech

Buffett's Berkshire Hathaway Finds One Place To Deploy Cash Horde: Fintech

Warren Buffett and Berkshire Hathaway, Inc. (NYSE: BRK-A) (NYSE: BRK-B) have found a solution to one of the best problems a company can have--too much cash.

What Happened

Over the weekend, Berkshire confirmed previous reports it's investing in One97 Communications, the parent of Indian fintech company Paytm. The financial terms of the deal were not disclosed, but reported Berkshire is taking a 3 to 4 percent stake in One97 for between $272 million and $340 million that would value the company at roughly $10 billion.

Berkshire also invested about $300 million in Brazilian payment processing company StoneCo (NASDAQ: STNE), which went public last week.

Why It’s Important

In Buffett's quarterly shareholder letter, he said it has been difficult to identify acquisition opportunities to wisely invest Berkshire’s $116 billion in cash and bonds to generate earnings growth for investors. Berkshire’s decision to take a stake in Paytm is a sign Buffett sees an opportunity in India and in fintech.

Warren Buffett is getting into the payments game and you can learn about the future of payments at the Benzinga Fintech Summit.

Paytm is India’s largest mobile payment company, but One97 has long-term aspirations to become India’s leading chat app, one of the nation’s largest banks, a major e-commerce player and a leading provider of bill payment and online travel services.

As part of the new investment, Berkshire’s Todd Combs will join the One97 board of directors. Other notable One97 investors include China’s Alibaba Group Holding, Ltd (NYSE: BABA) and Japan’s SoftBank Group Corp (OTC: SFTBY).

What’s Next

Buffett’s actions always get Wall Street’s attention, and a $340 million investment is small change for a company with $116 billion in cash. Investors will be watching to see if Buffett follows up his One97 investment with even more investments in India and/or fintech.

Related Links:

An Early Investor In Venmo Surveys The Current Fintech Landscape: 'The Seed Market Has Stratified'

The 'Buffett Indicator' Says Stocks Are More Overvalued Now Than Before Dot-Com Bubble Or Great Recession

Berkshire Hathaway CEO Warren Buffett with former President Barack Obama. White House photo by Pete Souza.


Related Articles (BRK-A + BRK-B)

View Comments and Join the Discussion!

Posted-In: One97 Paytm Warren BuffettFintech Emerging Markets Top Stories Markets Media Best of Benzinga