Warren Buffet’s Berkshire Hathaway exits Paytm, sells entire stake at a 40% loss

In a significant strategic move, renowned investment firm Berkshire Hathaway, led by legendary investor Warren Buffet, has executed a complete divestment from One97 Communications Ltd, the parent company of the Indian digital payments and financial services giant, Paytm.

The withdrawal of Berkshire Hathaway unfolded as a substantial block deal involving the sale of 1.56 crore shares of Paytm, amounting to a noteworthy equity stake of nearly 2.5%. The development was revealed via exchange data, and the stake was sold through the open market for about ₹1370 crore. The per-share price in this move stood at ₹877.29. Key players entering the scene as buyers were Copthall Mauritius Investment and Ghisallo Master Fund, securing 1.19% and 0.67% stakes, respectively (Ghisallo Master Fund bought 42,75,000 shares of Paytm, while Copthall Mauritius Investment bought a total of 75,75,529 shares). The culmination of this transaction marked the entirety of Berkshire Hathaway’s exit from Paytm, resulting in an approximate loss of ₹600 crore.

Warren Buffet’s entry into the Paytm investment landscape dates back to September 2018, with the acquisition of a stake of 2.6% that had involved an investment of ₹2,200 crore ($300 million). The subsequent journey witnessed Berkshire Hathaway’s active participation in the Paytm IPO in November 2021, where shares worth ₹220 crore were strategically offloaded. The recent divestment now stands as a conclusion to Berkshire Hathaway’s noteworthy five-year engagement with Paytm.

In response to the revelation of Berkshire Hathaway’s exit, Paytm’s stock witnessed a notable decline, concluding at ₹895 on the National Stock Exchange (NSE). This marked a 3.08% decrease from the preceding day’s closing price of ₹923.40. The intra-day oscillations saw the stock opening at ₹920 and reaching a low of ₹877.15, and is currently priced at ₹899.50. The timing of Berkshire Hathaway’s exit coincides with heightened regulatory scrutiny faced by One97 Communications, particularly in the wake of the RBI’s recent interventions in retail loan segments. The regulatory measures, specifically targeting consumer lending by non-banking financial companies (NBFCs) and banks, add an additional layer of complexity to the dynamic fintech landscape.

The decision to exit Paytm forms part of Berkshire Hathaway’s broader portfolio adjustments and strategic realignment. The investment giant has been actively fine-tuning its holdings, with exits from positions in various companies. This divestment from Paytm reflects the dynamic nature of investment strategies, with Berkshire Hathaway recalibrating its portfolio composition in response to evolving market conditions.