Warren Buffett exits Paytm; locks in huge loss after RBI diktat

Billionaire investor Warren Buffet has completely exited India’s homegrown fintech, Paytm. According to NSE data, the US based investment mogul sold entire 2.46 per cent stake in the Vijay Shekhar Sharma held fintech through bulk deal worth ₹1,370 crore. According to media reports, the ace investor had to book heavy losses in excess of ₹800 crore in the fintech. Buffet had invested nearly ₹2,200 crore in the fintech in 2018. And he has sold the shares at valuation of ₹1,370 crore locking in huge losses. The investment mogul sold shares at the price of ₹877.29 on Friday.

Apparently, Buffett completely exited Paytm following RBI’s latest diktat  for lenders in India requiring those to keep more capital aside before making advances. Apparently, this would have adverse impact on fundamentals of the fintech. Probably, this is the reason why Buffett has finally bid adieu to the fintech that too at a loss.

Earlier on Friday, in anticipation of the bulk deal, Paytm’s scrip plunged 3 per cent on the bourses. Shares closed in red on the BSE at ₹895 apiece. And it is anticipated, that Paytm may face selling pressure in coming days as well. There is heavy investment by retail investors too. As of Q2 FY24, retail investors held 8.28 per cent stake in the fintech. Now, their investments might get trapped. Most of these retail investors had bought the shares in its IPO. Price band was ₹2,080 – ₹2,150. The fintech’s shares are still trading at discount of 140 per cent to the IPO issue price.

Warren Buffet had invested in Paytm via his company, Berkshire Hathaway, which sold its entire stake in the fintech. Berkshire Hatthaway sold Paytm investment to hedge fund Ghisallo Master Fund  and Copthull Mauritius Investment. The hedge fund had earlier invested in Paytm at a lower share price. It has now upped its stake in the fintech.