Consumer internet group, Prosus N.V. (‘Prosus’), on Tuesday said that it has reached an agreement, along with fintech subsidiary PayU, to acquire Indian payment gateway service provider BillDesk for $4.7 billion.
The transaction, which is subject to approval from the Competition Commission of India (CCI), builds on previous acquisitions by PayU in India. This deal marks an exit for BillDesk investors including General Atlantic, TA Associates, Clearstone Venture Advisors, Visa Inc and Temasek Holdings. The deal is expected to be cleared by the first quarter of 2022.
This marks the largest exit clocked by an Indian startup through an acquisition, zooming past Snapdeal’s $400 million acquisition of Freecharge, and BYJU’s $950 million acquisition of Aakash Educational Services Ltd., earlier this year.
In the past, PayU India had snapped up payments technology company CitrusPay in 2016 for $160 million. It then acquired digital credit platform Paysense in 2020 for $185 million.
The deal, if cleared, will bring Prosus’s cumulative investment in Indian tech to more than $10 billion.
Together, PayU India and BillDesk will be able to meet the changing payments needs of digital consumers, merchants and government enterprises in India and offer state-of-the-art technology to even more of the excluded sections of society, while adhering to the regulatory environment in India and delivering robust consumer protection, Prosus said in a statement.
“We have a long and deep relationship with India, having supported and partnered with some of its most dynamic entrepreneurs and new tech businesses since 2005. We’ve invested close to $6 billion in Indian tech to date, and this deal will see that increase to more than $10 billion.
BillDesk exemplifies the ambition and expertise of Indian entrepreneurs, who are among the best in the world, with exceptional abilities to build products and services and understand scale and value. This is critical in a country as vast as India,” said Bob van Dijk, group chief executive officer (CEO) of Prosus.
“Our announcement today reflects Prosus’s desire to build valuable, global consumer internet businesses that provide useful products and services for millions of people in their everyday lives. Along with classifieds, food delivery, and education technology, payments and fintech is a core segment for Prosus, and India remains our number one investment destination,” added Dijk.
With the acquisition and integration of BillDesk, PayU will be handling a total payment volume (TPV) of $147 billion.
PayU India and BillDesk run complementary businesses within India’s digital payment industry. Together, the two expect to create a financial ecosystem handling four billion transactions annually - four times PayU’s current level in India.
Payments for domestic and cross border transactions is one of the major revenue units for PayU globally.
For the financial year ended March 2021, PayU increased its TPV 51% year-on-year to $55billion across India, Latin America and Europe, the Middle East and Africa (EMEA). The BillDesk acquisition is expected to bolster this growth only further.
“We believe this transaction will stimulate both innovation and competition within India’s digital payments industry. This will not only help to strengthen India’s digital economy, but also bring financial services to those who may have historically been excluded. This ambition is fully aligned with the Government of India’s vision of ‘Digital India’ and is a key objective for PayU across all the communities we serve globally,” said Laurent Le Moal, CEO of PayU.
BillDesk, founded in 2000, is one of the leading payment gateway providers in the country, and was a strong competitor to PayU in India.
“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. We are excited about what the two great teams at BillDesk and PayU can deliver together as a driving force within the evolving digital payments landscape in India,” said M N Srinivasu, co-founder of BillDesk.