Berkshire Hathaway, the multinational holding company headed by legendary investor Warren Buffet, has reportedly invested $600 million in fintech payments. According to a report from the Wall Street Journal, the investment is focused on payment services in upcoming markets.
More specifically, the Omaha-based firm has supposedly participated in Brazil’s fourth-largest payment processor StoneCo’s IPO. This is in addition to a $300 million stake in the parent company to ”Paytm”, one of Indian’s most major mobile payment services.
It should be noted that this marks a move from the firm’s usual investments in steady blue-chip businesses. It also comes as Berkshire Hathaway is said to be ”widening the net” on its investments.
Investments clash with Buffet’s views on fintech
Furthermore, these investments in mobile payments clash somewhat with Buffett’s aversion to fintech investments. Buffet has previously been vocal about his distaste for cryptocurrencies, earning him an infamous reputation in fintech circles.
He has previously referred to cryptocurrencies as ”rat poison squared”, and claimed that Bitcoin is neither a cryptocurrency, nor a way of investing. Moreover, he argued that Bitcoin has ”entered bubble territory” in October of 2017, stating that it was ”about to implode”.
Nevertheless, the recent article from the Wall Street Journal notes that Buffet has himself previously ceded that tech investments are ”beyond his area of expertise”.
Rather than Buffet, one of Berkshire Hathaway’s portfolio managers is said to have been a driving force behind the investments. This manager, Todd Combs, is one of the firm’s two portfolio managers, and reveal a diversifying investment strategy.
Previously, Berkshire Hathaway has mainly invested in blue-chip firms such as Coca-Cola, Apple, or acquired utilities and insurance firms.
Investments show maturity of fintech sector
Furthermore, the Wall Street Journal piece notes that these two investments show ”maturity” of the fintech sector. The sector as a whole is also said to have raised close to $35 billion in venture capital during 2018 so far.
Interestingly, the Indian payment service Paytm has been compared to cryptocurrencies – even though its technical nature is, naturally, completely different, and it is based on transferring a fiat currency.
It should also be noted that cryptocurrencies are especially popular in emerging markets. This is mainly due to people being unable to access traditional banking systems. It will, therefore, be interesting to see how Berkshire Hathaway’s newfound interest in emerging markets fintech will continue to develop – especially in relation to cryptocurrencies.
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Rasmus Pihl is a writer for Toshi Times by day and an avid follower of the cryptocurrency industry by night. Rasmus holds a Bachelor’s Degree in Marketing from the Gothenburg School of Business, Economics, and Law and runs a Swedish marketing consulting firm. Moreover, when he isn’t writing for Toshi Times, traveling, working or changing the world in some other capacity, Rasmus is more than likely caught up in postgraduate studies.