Berkshire Hathaway Exits Paytm: Unveiling a ₹500 Cr Loss
In a surprising move, billionaire Warren Buffet's conglomerate, Berkshire Hathaway, has parted ways with its entire stake in Paytm, the renowned digital payment company. This significant transaction has stirred the financial waters, leading to a substantial loss of over ₹500 crores for the global giant.
The Exit Strategy Unveiled
Berkshire Hathaway, operating as BH International, executed an open-market transaction, as revealed by bulk deals' data published by financial bourses. The firm relinquished its residual 2.46% stake in Paytm's parent company, One97 Communications, at a time when the fintech landscape is undergoing noteworthy shifts. Stake Redistribution
Ghisallo Master Fund and Copthall Mauritius Investment stepped into the scene as key players, acquiring 1.19% and 0.67% stakes, respectively. The sale, totalling ₹1,371 crores, saw Ghisallo purchasing 4,275,000 shares and Copthall acquiring 7,575,529 shares. The deal was sealed at ₹877.2 per share, reflecting a 5% discount to the Thursday closing price of ₹923.40. Unraveling the Financial Ties
This exit marks a culmination of a five-year investment journey for Berkshire Hathaway in Paytm, with the conglomerate previously selling some stake during the company's IPO in 2021. The financial manoeuvring resulted in a substantial loss, highlighting the dynamic nature of the fintech sector.
Regulatory Changes
Amid recent financial alterations, Paytm found itself navigating regulatory shifts. The Reserve Bank of India (RBI) had urged banks and shadow banks to maintain higher capital buffers, compelling Paytm to tighten its financial ship. The Deal Execution
Global investment bank JP Morgan played a pivotal role in executing the transaction, showcasing the interconnectedness of international financial players. The deal unfolded on Thursday, culminating in a 3.08% drop in Paytm's shares, closing at ₹895 a share on Friday on the National Stock Exchange (NSE). Join our WhatsApp Group for Trading/Investment ideas & Market Updates👇
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