Investment mogul Warren Buffett’s firm Berkshire Hathaway dumped its stake in Indian fintech giant Paytm last week, months after the firm posted its first-ever quarterly operating profit as a listed firm.
Berkshire’s BH International Holdings sold its entire stake in Paytm — approximately 2.46% — for about 13.71 billion rupees ($164.70 million) through a bulk deal on Friday.
The group sold more than 15.6 million Paytm shares, with a weighted average price of 877.29 rupees per share, exchange data showed.
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BH International had invested 21.8 billion rupees in Paytm in 2018, Indian finance newspaper Mint reported. It earned approximately 16.7 billion rupees through the deal on Friday and an earlier sale of shares during the Indian firm’s initial public offering in 2021, the report added.
The investment giant effectively exited the payments firm at a loss of more than 5.1 billion rupees (approximately $60.85 million), the report said.
Buffett’s shares were bought by foreign fund houses Ghisallo Master Fund and Copthall Mauritius Investment, the Mint report added.
Berkshire’s exit comes after a string of selldowns for Paytm, including stake cuts by Japanese conglomerate SoftBank Group and the exit of China’s Alibaba Group in February.
In September, Paytm CEO Vijay Shekhar Sharma had said he was open to increasing his stake, weeks after he purchased shares in the company from Chinese firm Ant Financial, becoming Paytm’s single largest shareholder.
Multiple challenges weigh on Paytm
Paytm’s IPO in 2021 was touted as India’s biggest-ever stock listing, with the payments firm scoring sky-high valuations from venture capitalists and private equity funds despite being a loss-making entity.
The IPO turned into a spectacular flop, however, as Paytm shares shed more than 55% within just two months of listing. They eventually bottomed out in November last year after falling close to 80%.
Paytm has seen a relatively better year in markets since, recouping some losses amid a wider rally in Indian indices this year. But the shares remain at a deep discount from their listing prices.
The company’s market performance has suffered in part due to its operational losses. It posted its first-ever quarterly operating profit of $3.8 million in February this year mainly on the back of rising mix of high-margin lending revenue, improving merchant subscription, reducing payment processing and promotional charges.
In October, Paytm reported a 32% increase in revenue for the second-quarter of 2023 but it still reported a consolidated net loss of 2.91 billion rupees.
Adding to Paytm’s woes, Indian regulators have also maintained scrutiny of its financial operations.
In October, India’s central bank imposed a penalty of 53.9 million rupees ($647,762.58) on Paytm Payments Bank for non-compliance with some provisions, including Know Your Customer (KYC) directions.
- Reuters, with additional inputs from Vishakha Saxena
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