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Business News/ Markets / Warren Buffett's Berkshire Hathaway exited Paytm 2 months ahead of RBI crackdown
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Warren Buffett's Berkshire Hathaway exited Paytm 2 months ahead of RBI crackdown

The transaction which happened via a bulk deal, was two months before the RBI on Wednesday ordered Paytm Payments Bank to stop accepting fresh deposits in its accounts or popular digital wallets from March.

FILE - Berkshire Hathaway Chairman and CEO Warren Buffett smiles during an interview in Omaha, Neb. (AP Photo/Nati Harnik, File) (AP)Premium
FILE - Berkshire Hathaway Chairman and CEO Warren Buffett smiles during an interview in Omaha, Neb. (AP Photo/Nati Harnik, File) (AP)

Warren Buffett’s Berkshire Hathaway had exited listed fintech company One 97 Communications , parent company of Paytm in an open market transaction. The transaction which happened via a bulk deal, was two months before the Reserve Bank of India or RBI on Wednesday ordered Paytm Payments Bank to stop accepting fresh deposits in its accounts or popular digital wallets from March.

On Thursday, the digital payments firm, which is founded by Vijay Shekhar Sharma, lost a fifth of its market value after the RBI ordered restrictions, raising worries over revenues from the company's main payments business. The order from the central bank could also lead to cancellation of license for Paytm Payments Bank. 

Also Read: Paytm share price hits 20% lower circuit after RBI's restrictions on Paytm Payments Bank

The bank, which houses all of Paytm's 330 million wallet accounts, is important to the company's app and wallet eco-system, which could be severely impacted if Paytm cannot find banking partners to replace its payments bank.

Paytm's share price on February 1 witnessed huge selling pressure. Paytm shares opened lower at 608.80 apiece on BSE and touched a 20 per cent lower circuit within a few minutes of the stock market's opening bell. Shares settled 20 per cent lower at 608.80 apiece on the BSE.

In November 2023, Berkshire Hathaway sold its residual 2.46 per cent stake in Paytm (it had sold some stake during the company’s IPO in 2021) for 1,371 crore to Ghisallo Master Fund and Copthall Mauritius Investment. Ghisallo purchased 4,275,000 shares, and Copthall, 7,575,529 shares. The deal was struck at 877.2 per share. Global investment bank JP Morgan helped execute the deal.

During One97’s IPO, Berkshire Hathaway had pocketed 301.70 crore, selling at 2,150 per share. Put together, the company has made a total of 1,672.7 crore from its investment in Paytm, essentially booking a loss of about 507 crore, Mint had reported. Some of the marquee backers of Paytm, such as SoftBank and Ant Group, among others, have been cashing out of the company in recent times.

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Published: 01 Feb 2024, 07:45 PM IST
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