Prosus Ventures, the global investment arm of South African internet giant Naspers, has agreed to acquire Mumbai-based payment gateway company BillDesk, for a whopping USD 4.7 billion in an all-cash deal.
The acquisition—one of the biggest in the USD 50–60 billion fintech market in India— will be carried through PayU, Prosus’ global fintech business. PayU, which is present across 20 countries, provides merchants with online payment solutions for domestic and cross-border transactions, along with credit solutions.
BillDesk, founded in 2000 by M.N. Srinivasu, Ajay Kaushal, and Karthik Ganapathy, is one of the country’s oldest online payment gateway companies, offering businesses solutions to accept, make, and collect payments. It is also one of the very few profitable fintech firms in India.
BillDesk is backed by US private equity major General Atlantic and Singapore’s Temasek, among others. Post the acquisition—which is subject to regulatory approvals that are expected to come over the next four to five months—PayU will own 100% of BillDesk, including the 29.6% stake owned by the three co-founders together. All the co-founders will stay with the company and scale the payments business under PayU. Avendus Capital and PJT Partners acted as financial advisors to Prosus on this transaction.
The handshake between the two payment gateway giants will solidify PayU’s position in India and make it one of the largest online payment providers locally and globally by total payment volume, the two companies said in a joint statement on Tuesday.
The development comes at a time when digital payments have seen a spurt in growth in the world’s second-most populous country since last year. Millions of Indians were forced to opt for online transactions amid the lockdowns imposed to curb the spread of COVID-19.
“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,” the companies said.
Prosus, which has been operating in India since 2005, is a backer of some of the most highly valued internet startups in the country, including food delivery firm Swiggy, edtech platform Byju’s, online pharmacy PharmEasy, and home services provider Urban Company. It has also made significant exits in the country, including e-commerce giant Flipkart and online travel portal MakeMyTrip.
According to Bob van Dijk, group CEO of Prosus, the investment firm has pumped in close to USD 6 billion in Indian technology companies to date, and the BillDesk deal will see that figure “increase to more than USD 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 Dijk in a statement.
He added that along with classifieds, food delivery, and education technology, payments and fintech are core segments for Prosus, while India remains its number one investment destination.
The opportunity to partner with PayU came “at a time when we reached a level (where we were exploring) whether to do an IPO or look for the next stage of growth,” said co-founder Srinivasu in an interview with local media Economic Times.
The Indian digital payments market is changing, and the fact that a larger-scale platform can naturally become a dominant player was one of the factors that urged BillDesk co-founders to accept the buy-out deal from PayU, he said. “We are a fairly large player, and this transaction just accelerates what can be done on the platform.”
BillDesk isn’t the only company PayU has acquired in India. Prior to this, PayU had bought fintech firms, including CitrusPay, Paysense, and Wibmo. Prosus’ fintech arm also makes strategic investments. It has backed local startups like gold-focused alternative credit platform Indiagold and wealth tech firm Fisdom.
“We believe this transaction will stimulate both innovation and competition within India’s digital payments industry,” said Laurent Le Moal, CEO of PayU, in a statement.