Berkshire Hathaway Sells Paytm Stake at a Significant Loss
Warren Buffett’s Berkshire Hathaway has officially exited its investment in Paytm-parent company One97 Communications, incurring a 40% loss on its initial 2018 investment. The sale marks the end of Berkshire’s high-profile foray into India’s fintech sector.
The Investment Timeline
- 2018: Berkshire invested \(260 million for a 3% stake in Paytm at a \)10 billion valuation
- 2021: Sold a portion of its stake for $36 million at a profit
- November 2023: Divested remaining shares for $121.6 million (Indian stock exchange filing)
Total return: Less than \(160 million on the original \)260 million investment
Paytm’s Rollercoaster Journey
As India’s leading digital payments platform, Paytm offers:
- Mobile transactions
- Loan services
- Mutual fund investments
IPO Performance
- 2021 debut: \(20B+ valuation at \)25.80/share
- Low point: Shares plunged to $5.58 in 2022
- Current recovery: Closed at $10.73 (November 24, 2023)
Recent Financial Improvements
Despite Berkshire’s exit, Paytm shows signs of stabilization:
- Q2 2024 revenue growth: 32% YoY (slightly down from 39% in Q1 due to festive sales timing)
- Strong performance:
- Consistent payment volume growth
- Robust loan business (though personal loans moderated)
- Multiple quarters of adjusted EBITDA profitability
Market Context
Berkshire Hathaway’s Paytm investment was significant as:
- First direct startup investment in India by Buffett’s firm
- Joined other major investors like Alibaba, SoftBank, and T Rowe Price
While the exit represents a loss for Berkshire, Paytm’s recent financial improvements suggest the company may be turning a corner in its post-IPO journey.
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