Paytm exit costs Berkshire Hathaway ₹507cr, emotions run high

On Friday, Berkshire Hathaway made headlines by exiting its investment in Paytm parent company, One97 Communications. The move resulted in.

On Friday, Berkshire Hathaway made headlines by exiting its investment in Paytm parent company, One97 Communications. The move resulted in a substantial 40% loss for the renowned firm, marking the end of a more than five-year investment journey. This departure is significant given the initial high-profile nature of the investment. Over the years, Berkshire Hathaway had maintained its stake in the company, but this recent exit signifies a shift in their strategy.

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In 2018, Warren Buffett’s firm, Berkshire Hathaway, put in around $260 million into Paytm. This secured them a 3% ownership in the financial services startup, valued then at roughly $10 billion. This investment was a substantial move by the renowned investor. The stake acquisition was part of their strategy, aiming for growth in the emerging financial tech market. Buffett’s firm saw potential in Paytm’s offerings and took a noteworthy position.

On Thursday, the transaction occurred. This led to a 3.08% drop in Paytm shares, closing at ₹895 each on Friday on the NSE.

Paytm IPO

During One97’s IPO, BH International earned ₹301.70 crore, selling at ₹2,150 per share. Overall, the company made ₹1,672.7 crore from its Paytm investment, facing a loss of about ₹507 crore.

Some key supporters of Paytm, like SoftBank and Ant Group, are selling their stakes. Despite a rocky start, Paytm’s stock is now thriving. Over the last year, it surged by 104%, outpacing Nifty50’s 8% increase.

In the last month, Paytm reported robust F2Q24 revenue growth of 32% YoY, a slight dip from the previous quarter’s 39% YoY, attributed to the timing of online festive sales. Despite moderation in personal loan growth, payments remained strong, contributing to improved profitability. The company narrowed its losses to ₹290 crore for the quarter ending September 2023, compared to ₹571 crore in the same period last fiscal year. YoY, revenue from operations grew by 32% to ₹2,519 crore, with Ebitda standing at ₹153 crore.

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