Berkshire Hathaway, the Warren Buffet-owned investment firm, has made a profit of $16 million on its sale of 1.4 million shares in the IPO of Paytm, which tanked 27 per cent on the day of listing.
On November 18, the shares of One97 Communications Ltd, Paytm's parent company, plummeted 27 per cent in their market debut, valuing the Ant Group-backed digital payments firm at around Rs 1.11 trillion.
Paytm's IPO was subscribed 1.89 times last week. The stock opened for trading at Rs 1,950 on the NSE from its issue price of Rs 2,150. The shares extended losses as the stock hit an intraday low of Rs 1,560. On the BSE, Paytm stock opened at Rs 1,955.
In September 2018, Berkshire had invested $300 million for 2.6 per cent stake in One97 Communications, in a funding round. The deal, made through BH International Holdings, is Buffett’s maiden investment in India.
The holding company’s average cost of acquisition in the digital payments startup is Rs 1,279.7 per share, which means the 1.4 million shares, worth Rs 179 crore were offloaded for Rs 301 crore at Rs 2,150 a share, the upper end of the price band, fetching Berkshire Rs 122 crore in gains, as per Fortune India.
Although institutional and retail investors have taken a knock on their investments with the share price falling 27 per cent to end at Rs 1,564.14 on the BSE on Thursday, the selling investors, including Berkshire, continue to sit on decent gains on their remaining holdings.
Based on Paytm’s closing market cap of Rs 1.01 lakh crore on Thursday, Berkshire’s current stake of 2.41 per cent is still worth Rs 2,443 crore against its acquisition cost of Rs 1,999 crore.
Moreover, One97 sits way down at 34 in terms of overall ranking in Berkshire’s portfolio of Top 50 holdings. Also, it fares much better than Berkshire’s holding in Sirius, the US-based satellite radio and online radio services player, which is valued at $276 million.