Home / Companies / PayU Global to buy rival Citrus Pay for $130 million

New Delhi: PayU Global, the digital payments provider owned by South Africa’s Naspers Group, will buy rival Citrus Pay for $130 million in an all-cash deal.

PayU India will have more than 30 million customers post the acquisition of Citrus Pay.

The company forecast it will process an estimated 150 million transactions, worth $4.2 billion, in 2016. The deal, once concluded, is expected to provide an attractive exit to Citrus Pay’s investors—Ascent Capital, Beenos and Sequoia Capital. PayU confirmed that the early investors will exit but declined to disclose details.

The deal was locked in less than six months, Laurent le Moal, chief executive officer of PayU Global, said, adding that the company is open to more acquisitions in the so-called fintech space.

“Millions of households and small merchants in India are underserved when it comes to banking and credit. The vast majority of them will be online in the coming years," le Moal said in an email. “This is why we are building a large set of financial services solutions."

Also read: The state of fintech in India

Citrus Pay managing director Amrish Rau will become chief executive of PayU India and will report to le Moal. PayU co-founder Nitin Gupta will leave the company to launch his own venture.

The Citrus acquisition also represents the latest expansion push by Naspers in India, which already owns the online travel venture Ibibo Group.

Naspers has now been involved in two of the five biggest transactions in the Indian start-up space. It also bought online bus-ticketing platform Redbus in 2013 for an estimated $135 million and owns a large minority stake in Flipkart, India’s largest e-commerce firm.

Earlier this year, Naspers said it would invest an additional $250 million in Ibibo Group.

PayU was rolled out by Ibibo as its payment gateway in 2011 in the Indian market. It sold the business to Naspers for a stake in the global payments business of Naspers. The move was seen as a strategy to consolidate all its local payments businesses into PayU Global.

The acquisition of Citrus Pay will help PayU increase the volume of transactions in India and bring down the cost incurred to fulfil these transactions, said Vivek Belgavi, partner and fintech leader at PwC India.

“It gives them greater access to customers and merchant network. Globally also, payments is a volume game so it does make sense for mergers and acquisition to happen in this space," he said.

The digital payments industry in India will grow 10-fold to touch $500 billion by 2020, according to a June study by Google and Boston Consulting Group.

Increasing penetration rate for smartphones, entry of several non-banking institutions offering payment services, consumer readiness to adopt digital payments and progressive changes in the regulatory framework will power the trend, the report said.

Citrus provides consumer payment and mobile banking services. It has partnerships with airlines and online platforms, including Amazon, BookMyShow, ShopClues, Jet Airways, IndiGo, GoAir, Faasos and Grofers.

Naspers has so far pumped in more than a billion dollars in India and has been active in the country since 2006.

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