Berkshire Hathaway has offloaded its entire 2.46% stake in Indian fintech unicorn Paytm, booking a loss of about 40% which translates to over Rs 600 crore on an investment made more than five years ago.
The Warren Buffet-led firm has sold the stake for about Rs 1,370.6 crore in a bulk deal on Friday, per a disclosure on the local Indian stock exchange. The transaction involved the sale of more than 15.6 million shares of the digital payments firm, with a weighted average price of Rs 877.29 per share.
Berkshire Hathaway picked up a 3% stake in total in Paytm for Rs 2,179 crore ($261 million) in 2018, thereby marking its first direct startup investment in India. The transaction at that time had pegged the valuation of Paytm at over $10 billion.
It sold shares worth Rs 220 crore in IPO in 2021 when the company launched its Rs 18,300 crore IPO, which is considered one of the biggest in the Indian startup ecosystem.
However, the company made a dismal debut following concerns over its high valuation and an uncertain path to profitability.
With the latest transaction, Berkshire Hathaway joins other investors including Japan’s SoftBank and China’s Alibaba Group that had trimmed their stakes in the firm this year.
While SoftBank had reportedly sold about 4% stake in Paytm in a series of transactions, China’s Alibaba also reportedly sold a 3.3% stake in the company.
In September, Paytm CEO Vijay Shekhar Sharma said that he is open to increasing his stake in the Indian fintech firm if there are sellers, weeks after he became the largest shareholder in the company by buying a stake from Chinese firm Antfin.
The digital payments firm recorded a revenue of Rs 2,519 crore ($302 million) in July-September 2023, compared with Rs 1,914 crore in the same quarter last year. It posted a net loss of Rs 292 crore in Q2 2023 ($35 million), which is nearly half of Rs 571 crore posted in Q2 of last fiscal.
Revenue in the first half of the fiscal year, meanwhile, rose 35% year-on-year to Rs 4,860 crore, compared with Rs 3,594 crore in April-Sept 2022. For the half-year, too, losses nearly halved to Rs 650 crore from Rs 1,217 crore in April-September 2022.
Paytm competes with players such as Google Pay and Walmart’s PhonePe in India. In the highly competitive UPI space in India, PhonePe, with over 400 million registered users, has outranked Google Pay and Paytm with a more than 45% market share of the transactions. PhonePe’s current valuation of $12 billion also puts it ahead of digital payments unicorn Razorpay, which was last valued at around $7.5 billion.
Paytm’s parent firm One 97 Communications’ stock dropped 3.08% to close at Rs 895 on NSE on Friday.