Warren Buffett’s Berkshire Hathaway Exits Paytm With Rs. 800 Crore Loss

Warren Buffett is known as one of the world’s best investors, but he seems to have met his match in one of India’s most famous startups.

Warren Buffett’s Berkshire Hathaway has completely exited from its position in Paytm in a large block deal. Berkshire Hathaway sold 1.56 crore Paytm shares — or 2.5% of its equity — worth nearly Rs. 1,370 crore at a share price of Rs. 877.29 in the stock markets today. Berkshire Hathaway, which had invested in Paytm in 2018, made an overall loss of Rs. 800 crore on its Paytm investment.

Paytm’s shares were trading down 5% in the stock markets today, before recovering somewhat to end the day trading at Rs. 895 per share, down 3% from their previous close. Paytm’s share is up 68 percent this year, which appears to have prompted Berkshire Hathaway to exit its investment. Paytm’s shares, though, are still trading nearly 60 percent below their IPO price.

Paytm had been Berkshire Hathaway’s first investment in India. As per media reports at the time, Paytm CEO Vijay Shekhar Sharma had been able to get the investment through just “one meeting and three phone calls.” The investment had drawn praise for Paytm from the entire startup ecosystem, with investors and founders alike praising the milestone for Indian startups.

But the investment didn’t turn out as Berkshire Hathaway would’ve hoped. The company had invested in Paytm at a valuation of around $12 billion, and saw its valuation grow to $16 billion in the next few quarters. However, Paytm’s IPO flopped spectacularly, and became the worst-performing large IPO anywhere in the world. Over the next few quarters, Paytm saw its stock plummet to a 75 percent discount to its IPO price. As the stock price has recovered somewhat, Berkshire Hathaway appears to have decided to cut its losses and exited with Rs. 800 crore in the red.

This isn’t how the company usually expects its investments to turn out. Berkshire Hathaway is one of the world’s most storied investment firms, and has invested in companies including Coca Cola, Apple, and Mastercard. It’s also famous for its long investments, with Buffett famously saying that “our favourite holding period is forever”. But the company’s first tryst with Indian startups has resulted in a full exit in 5 years — and a Rs. 800 crore loss to boot.