28-Nov-2023
2 mins read
On November 25, 2023, BH International Holdings, Warren Buffett’s investment firm offloaded its entire stake in One 97 Communications, the parent company of the popular digital payment platform Paytm. This move had a considerable impact on the Paytm’s share price, leading to a 3% dip in its value.
Buffett’s Initial Investment and Paytm’s Journey
Warren Buffett’s association with One 97 Communications began in 2018 when his investment firm acquired a 2.6% stake by investing nearly Rs 2,200 crore. This initial investment marked a significant endorsement of Paytm’s potential in the digital payment sector. However, as the company went public in 2021, Buffett’s firm engaged in a Rs 200 crore stake sale during the IPO.
Recent Stock Transaction Details
The recent exit involved BH International Holdings selling 1.56 crore equity shares, constituting 2.46% of the paid-up equity, at an average price of Rs 877.29 per share. The total transaction amounted to Rs 1,370.6 crore. The sale triggered a 3% drop in Paytm’s stock price, closing at Rs 895 on November 25.
Market Response and Paytm’s Opening Stock Value
In the aftermath of Buffett’s exit, shares of One 97 Communications opened 1% lower on November 28, with the stock trading at Rs 889.70 at 12:40 pm. This decline reflects the market’s immediate response to the prominent investor’s departure.
Foreign Investors Enter the Scene
Following Buffett’s exit, foreign investors Copthall Mauritius Investment and Ghisallo Master Fund LP swiftly stepped in. They acquired 75.75 lakh and 42.75 lakh shares, respectively, at an average price of Rs 877.2 per share. This move by foreign investors showcases continued interest in Paytm despite Buffett’s departure.
Buffett’s Loss and New Stakeholders
Warren Buffett’s exit from Paytm resulted in a loss of about Rs 507 crore, considering the transaction occurred at an average price of Rs 877.2 per share. The entirety of Berkshire’s stake was acquired by Ghisallo Master Fund and Copthall Mauritius Investment, positioning them as new stakeholders in the digital payment giant.
Analysing the Impact on Paytm’s Future
The divestment by Warren Buffett raises questions about the outlook of Paytm and the digital payment sector. Investors and market analysts will closely monitor the company’s performance in the coming months to gauge the repercussions of losing such a prominent backer.
In conclusion, the exit of Warren Buffett from One 97 Communications has undoubtedly made waves in the financial landscape, impacting Paytm’s stock value and prompting a reshuffling of major stakeholders. As the digital payment sector continues to evolve, the aftermath of Buffett’s departure will be closely observed by both existing and potential investors in Paytm.
Also Read: Paytm Faces 5% Stock Decline in Block Deal: Rs 1,441 Crore Worth Shares Exchanged