A Strategic Move: Berkshire Hathaway’s Paytm Exit
Warren Buffett-led Berkshire Hathaway has made a significant move in the financial market by exiting its investment in Paytm. The investment giant sold its entire stake in One97 Communications Ltd, the parent company of Paytm, through a large block deal. The transaction resulted in a loss of over ₹600 crore for Berkshire Hathaway, according to exchange data.
The Block Deal Details
In this large block deal, Berkshire Hathaway sold 1.56 crore shares, constituting a 2.5% stake in Paytm. The total value of the shares sold amounted to nearly ₹1,370 crore, with each share priced at ₹877.29. This exit comes after Buffett’s notable investment in Paytm back in 2018, where he acquired a 2.6% stake by investing almost ₹2,200 crore ($300 million). The investment valued Paytm at $10–12 billion.
Berkshire Hathaway’s Paytm Journey
Berkshire Hathaway’s association with Paytm continued until the Paytm IPO, during which the investment giant sold shares worth ₹220 crore. The recent block deal further marks the complete exit of Berkshire Hathaway from its Paytm investment, resulting in a substantial loss.
Buyers in the Transaction
The buyers in this transaction include Copthall Mauritius Investment and Ghisallo Master Fund. Copthall Mauritius Investment acquired a 1.19% stake, while Ghisallo Master Fund secured a 0.67% stake in Paytm.
Berkshire Hathaway’s Portfolio Adjustment
During the third quarter, Berkshire Hathaway made strategic adjustments to its portfolio, exiting stakes in companies like General Motors and Activision Blizzard. The investment giant also reduced its holdings in various companies, including HP.
Paytm’s Market Performance
Paytm has been in the spotlight recently, especially after the Reserve Bank of India (RBI) implemented stricter norms for consumer lending. The regulatory changes required banks and shadow banks to maintain higher capital buffers. Despite the challenges, Paytm was included in the MSCI Global Standards Index.
In the stock market, One 97 Communications Ltd’s share price closed at ₹895 apiece, experiencing a 3.08% decline on the NSE at the end of Friday’s trading. The stock opened at ₹920 and reached an intra-day low of ₹877.15. Although the Paytm share price has shown an overall gain of more than 68% this year, it reflects a negative one-month return of -2.3%.
Paytm’s Q2 Financial Performance
As of the second quarter that ended on September 30, 2023, Paytm’s parent company, One97 Communications, reported a net loss of ₹290.5 crore. In the same quarter last year, Paytm had posted a net loss of ₹571.1 crore. Despite the loss, the company witnessed a 32% increase in total revenue, reaching ₹2,519 crore compared to ₹1,914 crore in the corresponding period of the previous fiscal year.