The Competition Commission of India (CCI) has cleared PayU’s acquisition of BillDesk after seeking multiple queries over the last year, paving the way for the largest consolidation in the fintech segment in India.
“Commission approves acquisition of 100 per cent of the equity share capital of IndiaIdeas.com (BillDesk) by PayU Payments”, the competition watchdog tweeted on Monday.
This brings PayU owner Prosus' total investments in India to $12 billion.
“CCI has unconditionally approved the proposed transaction involving the acquisition of IndiaIdeas.com (BillDesk) by PayU India. The proposed transaction involved novel assessment by the CCI of dynamic digital markets,” PayU said in a statement.
The deal was first announced last August but was held as CCI sought additional details from PayU.
PayU also had to respond to a show cause notice from CCI by end of August 2022 , a person familiar with the deal said.
PayU said the combined business will be positioned among the top 10 online payments players globally. This transaction will benefit customers and merchants bringing more resilience and stability to the growing fintech ecosystem in India.
Trilegal represented Prosus and PayU while Shardul Amarchand Managladas & Co acted as legal advisers for BillDesk.
"The CCI issued a show-cause notice with their prima facie competition concerns and sought an explanation as to why a detailed investigation in Phase II should not be undertaken. The Trilegal team advanced legal and economic arguments and successfully convinced the CCI to approve the transaction in Phase I without any remedies," a Trilegal spokesperson said.
"This is the first and only instance of the CCI clearing the transaction unconditionally (i.e. without any remedies) after issuing a show-cause notice," the Trilegal spokesperson said, adding that senior advocate Dr. Aditya Sondhi appeared before the CCI on the response to show-cause notice.
Following queries from the antitrust regulator for more information on the deal, PayU filed a revised merger notification in April this year.
It said that the proposed transaction will not cause any appreciable adverse effect on competition "on account of the highly competitive, dynamic nature of the markets consisting over 100 competitors providing similar or sustainable products/services."
PayU also said the low switching costs for merchants and open and interoperable nature of various products or services that comprise respective markets and constituent segments ensured that the market remained competitive.
On Monday, Anirban Mukherjee, chief executive officer of PayU India said that its owner Prosus believed that this acquisition of BillDesk will have "significant pro-competitive benefits for the Indian economy and will strengthen the Indian digital payments market, which is fully regulated by the Reserve Bank of India. This acquisition by PayU of BillDesk is also consistent with the Government of India’s Digital India mission and will benefit Indian merchants, government institutions and consumers," Mukherjee said.
Founded in 2000 by MN Srinivasu, Ajay Kaushal and Karthik Ganapathy, Bill Desk is one of the leading payment gateway providers in the country and was a strong competitor to PayU in India.
Before BillDesk, PayU India bought payments technology company CitrusPay in 2016 for $160 million. It then acquired digital credit platform Paysense in 2020 for $185 million.
Prosus Ventures invests in digital assets across India, Southeast Asia, Latin America, Europe and the US.
In FY22, Prosus Ventures invested a total of $900 million. Out of this, $800 million was invested in India, the investment arm of the South African conglomerate Naspers Ltd. It made investments worth around $900 million in 50 closed transactions across 34 companies, VCCircle reported in June.
Last year, it made a follow-on investment of $127 million in edtech firm Eruditus and in September added another $134 million to its previous investment in social e-commerce platform Meesho. It also invested an additional $299 million in Swiggy in FY22. In addition, Prosus Ventures also made smaller investments across B2B seafood marketplace Captain fresh, event-focused management platform Airmeet, logistics startup ElasticRun, B2B marketplace Fashinza, agri tech platform DeHaat and the Good Glamm Group.
One of its most recent bets in India is on online used-phone seller Cashify which raised $90 million (Rs 702 crore) in its Series E funding.