“Berkshire Hathaway Sells Paytm Stake, Incurs ₹620 Crore Loss Exiting with 2.5% Stake”
Warren Buffet’s Berkshire Hathaway sells its entire stake in Paytm, facing a substantial loss of ₹620 crore, shedding light on the evolving landscape of fintech investments amidst changing regulatory dynamics.
Billionaire investor Warren Buffet’s conglomerate, Berkshire Hathaway, has made headlines with its decision to divest its entire stake in the digital payment giant, Paytm, incurring a significant loss of over ₹620 crore.
Berkshire Hathaway concluded the sale by offloading a 2.46 percent stake in Paytm’s parent company, One97 Communications, through its affiliate BH International Holdings. The move amounted to selling approximately 1.56 crore shares of Paytm on the National Stock Exchange (NSE) at an average price of ₹877.29 apiece, resulting in a transaction value of ₹1,370.63 crore.
The firm’s investment history with Paytm reveals its initial acquisition of a 2.6 percent stake for ₹2,179 crore, buying shares at ₹1,279.7 per share. However, the recent sell-off demonstrates a substantial loss compared to the initial investment, marking a notable financial setback for Berkshire Hathaway.
Following Berkshire Hathaway’s exit, the shares of One97 Communications experienced a decline of around 3%, closing at ₹895 apiece. The divested stakes were reportedly acquired by Copthall Mauritius Investment and Ghisallo Master Fund, purchasing 1.19% and 0.67% stakes, respectively.
Amidst this development, Paytm, operating under One97 Communications, recorded a narrowing consolidated loss of ₹291.7 crore in the second quarter of the fiscal year. Despite a revenue surge of 32%, reaching ₹2,518.6 crore from ₹1,914 crore a year earlier, Paytm has encountered financial challenges necessitating a strategic realignment due to recent regulatory shifts, including the Reserve Bank of India’s call for increased capital reserves among banks and shadow banks.
This divestment by Berkshire Hathaway reflects evolving market dynamics, especially in the financial technology sector, as Paytm navigates adjustments to its financial strategies amidst changing regulatory landscapes.
The move by Buffet’s firm signifies a shift in investment focus, echoing the intricate challenges present in the evolving fintech space, while also spotlighting the ongoing volatility in investment decisions within the industry.
This sale not only portrays a substantial financial loss but also underscores the complexities and ever-evolving nature of investment strategies in the dynamic digital payment sphere.
Sources By Agencies
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