There is more consolidation in the payments industry: Prosus, the Dutch tech company that combines Naspers’ fintech and e-commerce with other investments outside of South Africa, including a large stake in Tencent, announced today that it will pay $4.7billion to buy BillDesk (a Indian payments provider). Prosus plans to combine BillDesk with PayU, its existing global fintech and payments business, which already has a strong presence in India. The deal has been rumored to be in the works since about July.
PayU will be one of the largest online payment service providers worldwide with $147 billion annually in payments. The all-cash transaction is not just a consolidation move in payments, but it highlights Prosus’ continued focus on India and developing markets. Prosus stated that this deal, which is one of Prosus’ largest ever and one of India’s biggest M&A deals, will increase its Indian fintech holdings by $10 billion.
That is part of a long-term strategy for Prosus (and Naspers) that stretches back nearly a decade involving a number of other acquisitions and investments in startups in the region.
Indian regulator Competition Commission of India will need to approve the proposed acquisition. Prosus executives and PayU executive said Tuesday that they expect to receive approval from the Indian regulator Competition Commission of India. PayU and BillDesk are complementary businesses. India’s top banks use BillDesk to connect with a wide range of merchants in the telecom, travel, insurance and mutual fund sectors.
Bob van Dijk (prosus group CEO) stated that payments and fintech are a key segment and India is our top investment destination. PayU is a mix of different interests in fintech, payments and other assets that Naspers (and later Prosus), had acquired over many years. It currently operates in around 20 markets.
India is a large market for financial services. It has a growing middle class and digitally-savvy consumers.
PayU is a solid player in this space. PayU has proven to be highly competitive on the Indian market for online merchant acquisition. This is both in terms of price and field sales efforts. PayU India has a dominant share in the payments gateway business where it traditionally competed with BillDesk and CCAvenue (owned in part by Infibeam) — and of lately, Sequoia Capital India-backed RazorPay.
BillDesk was founded in 2000. Its investors included Visa and General Atlantic as well as the State Bank of India. PitchBook estimated that its valuation was around $1.53 billion in 2019 when it last raised money. Tracxn estimated that the founders still owned just under 30% of the company ahead of this acquisition.
BillDesk, already a big contractor for several government departments, is among the firms that has applied for the license of NUE, a new retail payments networks proposed for India that is expected to compete with established UPI railroads. BillDesk is partnering with Visa, ICICI Bank and Axis Bank for this license.
Anirban Mokherjee (CEO of PayU India) suggested today on a conference call that Prosus might explore expanding BillDesk’s business beyond India’s second-largest nation. However, this cautionary statement was not yet made.
Laurent Le Moal (CEO of PayU), stated that the transaction would stimulate innovation and competition in India’s digital payment industry. This will help India’s digital economy to grow and provide financial services for those previously excluded. This vision is in complete alignment with the Government of India’s Vision of “Digital India” and PayU’s key goal for all communities that we serve worldwide.
PayU announced today that it had seen a 51% increase in domestic and cross-border transactions business in March 2021 across operations in India and Latin America. This is a sign of the boom in global digital payments markets following the Covid-19 pandemic.
PayU also operates credit solutions in India and five additional markets. Prosus itself is also an active investor, with stakes in remittance company Remitly and others — representing a pipeline for strategic partnerships, but also potentially future acquisitions.
Publiated at Tue 31 August 2021, 07:27:22 (+0000).