General Atlantic, Temasek set to invest Rs1,000 crore in BillDesk
If the deal closes, it would be the fourth round of funding for the online bill payments firm and the first in almost three years
Mumbai: Marquee private equity (PE) funds, the US-based General Atlantic Llc and Singapore’s Temasek Holdings Pte, are in final stages of discussion to jointly acquire significant minority stake in BillDesk, an online payment gateway solution provider, two people familiar with the development said.
The investment value will be about Rs.1,000 crore ($150 million), said the first person quoted above, on condition of anonymity. General Atlantic will invest the majority of this while Temasek Holdings will contribute up to a quarter of the total investment, the person added.
BillDesk, which provide online bill payment services to banks and billing companies in India, is part of IndiaIdeas.com Ltd, founded in early 2000 by three ex-Arthur Andersen Llp professionals—M.N. Srinivasu, Ajay Kaushal and Karthik Ganapathy. Its clients include leading banks such as State Bank of India, Citibank India, HDFC Bank Ltd, ICICI Bank Ltd, and telecom firms such as MTNL, Reliance Communications Ltd, Vodafone India, Bharti Airtel Ltd and Tata Teleservices Ltd.
If the deal closes, it would be the fourth round of funding for BillDesk and the first in almost three years. In 2012, US-based PE firm TA Associates made an undisclosed investment in BillDesk. In 2006, Clearstone Venture Partners and State Bank of India jointly invested $7.5 million in the company.
BillDesk’s first investment had come from SIDBI Venture Capital Ltd and Bank of Baroda in 2001.
A mail sent to director and co-founder M.N. Srinivasu on Thursday did not elicit a response.
A Temasek spokesperson said that the company does not comment on market speculation and a spokesperson for General Atlantic refused to comment.
BillDesk has a first-mover advantage in the online bill payment market, which has become increasingly competitive.
The company now competes with other firms such as PayUmoney, Paytm, Citrus Payment Solutions and CC Avenue in the segment.
“Billdesk had a first-mover advantage, and this has played a key role in keeping its leadership position in bill payments. The company possibly has 70% of the online billing market. With the expected growth in electronic payments and government’s thrust on it to avoid cash transactions, the opportunities in this sector are immense,” said Sanjeev Krishan, leader (transaction services and private equity) at PwC India.
The segment’s growth potential has attracted private equity and strategic investors to the broader payment space of which online bill payments is a part.
In August, Bharti Airtel, India’s largest telecom services provider, acquired Mumbai-based mobile payments start-up YTS Solutions for an undisclosed amount.
Online payment service provider Paytm (a brand of One97 Communications) raised $635 million from Alibaba Group Holding Ltd this year.
Online payment solution firms such as Razorpay Software Pvt. Ltd, ZipCash Card Services Pvt. Ltd, Bengaluru-based Ezetap Mobile Solutions Pvt. Ltd, Chennai’s ChargeBee Technologies Pvt. Ltd and digital wallet firm One Mobikwik Systems Pvt. Ltd have all raised funds from PE/venture capital investors.
The total e-bill payment market in India is likely to grow at a compounded annual rate of 50% to cross Rs.30,000 crore by 2020, according to a June report, India Payments 2015, by Motilal Oswal Financial Services.
Over the next five years, share of e-bill payments, in the total bill payment market, is expected to rise from 0.5% in 2014 to 2.7% in 2019, it said.
The deal, if closed, would be General Atlantic’s second investment in the financial services sector this year. On Saturday, it acquired a 21.61% stake in IIFL Wealth Management Ltd, a unit of IIFL Holdings Ltd (formerly India Infoline Ltd) for Rs.1,122 crore.
Since its first investment in Patni Computers in 2002, General Atlantic has invested about $1.7 billion in India.
The fund presently has seven portfolio companies in India, including Hinduja Group-promoted IndusInd Bank, National Stock Exchange Ltd, CitiusTech Healthcare Technology Services Pvt. Ltd, House of Anita Dongre, Asian Genco Pte Ltd, Mu Sigma and IBS Software Services.
Temasek Holdings is also an active investor in India, and the country currently accounts for about 4% of the Singapore fund’s portfolio, worth $190 billion, as of 31 March. On 13 October, Temasek agreed to invest in insurance portal Policybazaar.com by acquiring stake from existing shareholder Info Edge (India) Ltd.
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