June 16, 2024
Warren Buffett's Berkshire Hathaway exits Paytm at a 40% loss

Berkshire Hathaway exited Paytm-parent firm One97 Communications Friday at a loss of about 40% on the high-profile investment it made more than five years ago.

The Warren Buffett firm invested about $260 million in Paytm in 2018, acquiring a 3% stake in the financial services startup at a valuation of about $10 billion.

The investment giant — which sold a stake worth $36 million in Paytm in 2021, at a profit — sold its remainder position on Friday for $121.6 million, according to disclosure by the local Indian stock exchange. Berkshire secured a return of less than $160 million on its ~$260 million investment in Paytm.

Paytm was Berkshire Hathaway’s first direct startup investment in India, with the deal widely celebrated by the local startup ecosystem. Alibaba, SoftBank, and T Rowe Price were among other investors in Paytm.

But while Paytm, which allows users to make digital mobile transactions as well as access loan and invest in mutual funds, made its initial public offering at a valuation north of $20 billion, it fell dramatically in the aftermath.

Shares of Paytm, which made its IPO debut in 2021 at $25.8 apiece, fell to as low as $5.58 a year ago. The Indian firm has since rebounded, ending Friday at $10.73 apiece following fast revenue growth and improving finances in recent quarters.

Paytm revealed last month that its F2Q24 revenue growth was strong at 32% YoY, vs. 39% YoY last quarter (moderation owing to timing of online festive sales). Payments continued to be strong while the loan growth remained high but personal loan growth moderated. Profitability improved; making it yet another quarter of adjusted EBITDA profit.

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