In Close Shave, 'Indian Warren Buffett' Cut Stake In Edelweiss Before Regulatory Action

Renowned Indian- American investor Mohnish Pabrai parred some of his stake in Edelweiss Financial Services in April before the Reserve Bank of India's action on the company, adding another instance where foreign investors sold stake in Indian companies before regulatory action. This includes Warren Buffett who offloaded his stake in Paytm before regulatory action.

What Happened: Pabrai trimmed some of his stake in Edelweiss Financial in April. According to bulk deals data, Pabrai sold 3.25 crore equity shares, a 3.44% stake in the company at an average price of ₹70.02 in two transactions in April 2024. The value of the transaction would be at ₹227.81 crore. 

Pabrai held a 5.09% stake in the company till March 2024, according to shareholding data. The stake sale would reduce his holding in the company to 1.65%. The investor has been trimming his stake in the company as he held a 7.65% stake in the company till December 2023.

In May, RBI restricted the business of the company's NBFC and asset reconstruction arms citing non-compliance and lack of proper accounting. On Tuesday the asset reconstruction arm, Edelweiss Asset Reconstruction said RBI had rejected the appointment of Rajkumar Bansal as the company’s managing director and CEO. The company did not specify any reason for the rejection.

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This has been the third instance where foreign investors have sold stakes in companies that faced regulatory action later on, reported Mint. 

Softbank had sold most of its stake in Paytm through various bulk deals. Through SVF India Holdings (Cayman), Softbank had an 8.34% stake in Paytm in September 2023, now it has reduced to a 1.40 stake in March 2024. 

Buffett also exited Paytm in the previous year. BH International Holdings sold its entire 2.46% stake held in the company on November 2023. 

On January 31, RBI put business restrictions on Paytm Payments Bank

In IIFL Finance, Fairfax Financial Holdings of Prem Watsa sold a 5.66% stake in the company in December 2023. In March, RBI restricted IIFL Finance from issuing fresh gold loans due to supervisory concerns. 

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Posted In: EquitiesNewsMarketsEdelweiss Financial ServicesIIFL FinanceMohnish PabraiPaytmWarren Buffett