BillDesk eyes sale at up to $2 billion valuation
Bengaluru/New Delhi: Payments gateway BillDesk has held talks to explore a sale, as its private equity (PE) investors are seeking an exit amid increasing interest in the payments market, three people familiar with the matter said.
BillDesk (IndiaIdeas Com Ltd) has held sale talks with three payment giants—PayU, American Express and PayPal—the people cited above said. BillDesk is seeking a valuation of $1.5-2 billion but the potential buyers have been unwilling to meet its asking price, the people cited above said on condition of anonymity. Talks with all three firms fell through because of valuation differences, they added.
Backed by private equity firms TA Associates and General Atlantic as well as venture capital firm Clearstone Venture and Singapore’s state-held firm Temasek Holdings, and being a profitable company, BillDesk will continue to operate independently and will not sell until a buyer meets its asking price, the people said.
BillDesk, American Express and PayPal did not respond to emails seeking comment, while PayU declined to comment.
Started in 2000 by M.N. Srinivasu, Karthik Ganapathy and Ajay Kaushal, three former consultants at Arthur Andersen, the accountancy firm that went under, BillDesk is a low-profile company but among the stand-out start-ups in the country.
One of the few profitable internet companies, BillDesk reported a net profit of Rs76 crore on a revenue of Rs520 crore for the year ended March 2016, the latest for which numbers are available.
BillDesk, which competes with PayU, CCAvenue, Razorpay and others, provides payment solutions for customers in e-commerce, financial services, retail and other sectors. When shoppers make purchases on the platforms of its clients, BillDesk earns revenues by charging commission on these transactions. It processes tens of billions of dollars in transactions every year, but because digital payments is a so-called commoditized business, it can only charge slim commissions from clients.
In December, the Reserve Bank of India cut the commission rates on debit card transactions, in a blow to payment gateway service providers.
The digital payments business, both business-to-business and business-to-consumer, has seen explosive growth in the past three years. Last September, Citrus Pay, a smaller rival of BillDesk, was bought for $120 million by PayU Global, the financial services arm of South Africa’s Naspers. Pine Labs, another rival of BillDesk, raised $82 million earlier this month from Actis Capital and Altimeter Capital in a round that valued the company at close to $1 billion.
On the consumer side, digital wallet Paytm has seen its valuation grow nearly 50 times to $10.2 billion in just over three years. India also launched the payment network, Unified Payments Interface (UPI), in August 2016, prompting a bunch of companies including Flipkart Ltd, Google Inc. and Facebook Inc. to introduce their own payment apps.