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Warren Buffett's Berkshire Hathaway has made a notable move by exiting its investment in Paytm, an Indian digital payments and financial services company. This decision marks the end of a significant chapter in the investment journey of Berkshire in the Indian market.
In a substantial transaction, Berkshire Hathaway, through its subsidiary BH International Holdings, sold its entire 2.46% equity stake in Paytm. This sale involved around 1.56 crore shares, amounting to nearly Rs 1,370 crore. The average price per share in this transaction was Rs 877.29. Notably, this exit led to a loss of over Rs 506 crore for Berkshire Hathaway, a significant figure even for a company of its size and investment stature.
This investment journey began in 2018 when Buffett made his first-ever investment in an Indian company by investing nearly Rs 2,200 crore in Paytm. This initial investment valued Paytm at approximately $10-12 billion. However, during Paytm's IPO in 2021, BH International Holdings liquidated more than 14 lakh shares for Rs 301.7 crore, indicating a strategic shift in Berkshire's approach towards this investment.
Berkshire Hathaway's exit from Paytm occurs amidst a broader reshaping of Paytm's investor base. Earlier in February, China's Alibaba Group also sold its entire direct stake of 3.16% in Paytm, a transaction worth Rs 1,378 crore. Additionally, Softbank, another major investor, has been gradually reducing its stake in Paytm with the intention of a full exit.
Despite these significant divestments by prominent investors, Paytm's financial performance shows some resilience. The company reported a 32% increase in revenue to Rs 2,519 crore for the quarter ending September 2023. Moreover, it succeeded in reducing its losses to Rs 292 crore, down from a net loss of Rs 571.5 crore in the same period the previous year.
This development is a pivotal moment in the Indian fintech sector, illustrating the dynamic nature of investments and investor confidence in this rapidly evolving market. The decision by Berkshire Hathaway, a globally recognized investment conglomerate, to exit its Paytm investment could signal a reassessment of the opportunities and challenges in the Indian fintech space.
