The BillDesk acquisition will make PayU one of the largest players in India’s fintech payment ecosystem
Prosus NV, the Dutch unit of Naspers Ltd, has acquired Indian payment services provider BillDesk for $4.7 billion in cash in its largest acquisition.
The Amsterdam-based company’s PayU unit agreed to buy BillDesk to create a company that will handle a total payments volume (TPV) of $147 billion in India. The acquisition will also give PayU access to BillDesk’s large customer base of small merchants in India.
On completing the transaction, Prosus’s cumulative investment in India will nearly double to more than $10 billion.
The deal is the second-largest inbound acquisition in the tech space after Walmart Inc.’s acquisition of Flipkart for $16 billion in 2018. It’s also the largest acquisition in India’s fintech sector.
Prosus has been strengthening its position in India’s payments industry through PayU India. BillDesk marks PayU’s fourth acquisition in the last five years after it snapped up payments technology company CitrusPay in 2016 for $160 million.
It then acquired digital credit platform Paysense in 2020 for $185 million, which now powers its consumer lending aspirations in India.
“The acquisition cements our position as the leading payments provider in India and is the strong example of the ecosystem we are building to serve various communities," Bob van Dijk, group chief executive officer of Prosus, said in a conference call with reporters on Tuesday.
Prosus’s latest investment is expected to give exits to founders who own 30.84% in BillDesk along with key investors, including General Atlantic, TA Associates, Temasek and Clearstone.
The transaction, subject to approval from the Competition Commission of India (CCI), is expected to close by the first half of 2022.
BillDesk, founded in 2000 by M.N. Srinivasu, Ajay Kaushal and Karthik Ganapathy, has raised more than $240 million to date and was last valued at $1.8 billion in 2018.
BillDesk founders will continue with the firm.
The BillDesk acquisition will make PayU one of the largest players in India’s fintech payment ecosystem.
In addition, it will provide PayU access to BillDesk’s large merchant base, as the former looks to cross-sell products, including business lending.
Prosus has invested close to $6 billion in India and backed several companies, including online classifieds platform OLX, online tutoring company Byju’s, food delivery service provider Swiggy, and e-commerce giant Flipkart.
While PayU largely powers online payments for e-commerce companies, BillDesk’s strength lies in the bill payments and small merchant ecosystem.
Together, the two expect to create a financial ecosystem handling four billion transactions annually, four times what PayU processes in India.
Payments for domestic and cross border transactions is one of the major revenue units for PayU globally.
For the year ended March, PayU increased its TPV by 51% to $55 billion across India, Latin America and Europe, and the Middle East and Africa (EMEA) region.
The BillDesk acquisition is expected to bolster this growth.
“The BillDesk acquisition will now allow PayU to serve key audiences of merchants and consumers. We are thinking of the integration in a thoughtful way and will consult the Reserve Bank of India (RBI) closely on the same. This acquisition doesn’t only provide scale but market leadership. Our payments and credit business has largely grown organically, till date," said Anirban Mukherjee, chief executive officer, PayU India.
Mukherjee also said that PayU will explore introducing BillDesk’s proprietary solutions in international markets.
PayU India is currently focused on building a financial ecosystem through investments and acquisitions. It has made investments in mutual fund investment app Fisdom and digital gold platform Indiagold to strengthen its wealth management business.
“BillDesk has been a pioneer in driving digital payments in India for well over a decade. This investment by Prosus validates the significant opportunity in India for digital payments that is being propelled by innovation and the progressive regulatory framework put into place by the Reserve Bank of India, India’s central bank," Srinivasu said.