Legendary investor Warren Buffett led Berkshire Hathaway has offloaded its entire stake in One97 Communications Ltd, the parent company of India’s fintech platform Paytm, exchange data showed on Friday (November 24). The sale was executed in a large block deal, marking the end of an eventful journey in the Indian market.
Berkshire Hathaway, through its subsidiary BH International, divested approximately 1.56 crore shares, equivalent to 2.5% of Paytm’s equity, garnering nearly Rs 1,370 crore ($165 million). The shares were sold at Rs 877.29 each, with Copthall Mauritius Investment and Ghisallo Master Fund acquiring 1.19% and 0.67% stakes, respectively. This transaction signifies a retreat by Berkshire Hathaway from one of its notable international investments.
The exit was not without financial implications. Berkshire Hathaway has reportedly incurred a loss of about Rs 600 crore, a significant downturn from its initial investment. Buffett’s firm had initially acquired a 2.6% stake in Paytm in September 2018, investing approximately Rs 2,200 crore ($300 million). However, the value of this investment has since diminished, reflecting the challenges and volatility in the fintech sector.
The journey of India’s prominent digital payments and financial services platform – Paytm has been closely watched by investors and market analysts alike. Despite being the only Indian investment by Buffett, Paytm has faced various market pressures. The company’s inclusion in the MSCI Global Standards Index had raised expectations, but regulatory changes and market dynamics have posed challenges. The Reserve Bank of India’s recent tightening of consumer lending norms and increased capital buffer requirements for NBFCs and banks have further focused attention on Paytm.
Some media organisations were quick in pointing out that this move by Berkshire Hathaway aligns with its recent strategy of reducing the number of stocks in its portfolio, including exiting stakes in General Motors and Activision Blizzard and trimming investments in other companies.
The share prices of Paytm reflect these market sentiments. Closing at ₹895 on the National Stock Exchange on Friday, down 3.08% from the previous day, the stock has experienced fluctuations. Although Paytm’s share price has seen a considerable gain of over 68% this year, the one-month return remains negative at -2.3%.