.svg)
India’s competition commission has given the go-ahead to a new fintech acquisition that is thought to be the second-largest in the history of India’s online services sector.
Under the deal, the owner of payment gateway PayU India will acquire a 100 percent stake in IndiaIdeas.com, a rival payment gateway that trades under the brand name BillDesk.
According to documents released by Prosus, the Netherlands-based owner of PayU India, the total acquisition fee came in at $4.7bn.
This makes it the largest web services acquisition in India since 2018, when US supermarket giant WalMart acquired a majority stake in e-commerce platform Flipkart for $16bn.
Following the acquisition of BillDesk, PayU said the combined entity will be one the largest online payment providers in the world, handling a combined total payment volume (TPV) of $147bn per year.
Together, PayU and BillDesk expect to create a new combined entity that will handle 4bn transactions annually — four times PayU’s current level in India.
Prosus’s fintech empire goes global
The acquisition is in line with Prosus’s focus on high-growth markets. Currently, PayU operates in more than 20 markets worldwide and serves over 300,000 companies.
For the financial year (FY) ending March 2021, PayU reported 57 percent year-on-year growth in its TPV in India, Latin America and EMEA, bringing its total TPV worldwide to $55bn.
PayU’s three core businesses are payments for domestic and cross-border transactions; credit solutions for consumers and small businesses; and strategic investments in “innovative” fintech companies.
PayU has multiple licensed credit operations in India, including a partnership with buy now, pay later (BNPL) firm ZestMoney, and it also holds credit distribution agreements in Poland, Czech Republic, Romania, Nigeria and Russia.
PayU’s strategic investment arm has invested in services such as Remitly and Bakkt in the US, a remittance specialist and digital asset company respectively, and it has invested in financial infrastructure with the National Payments Corporation of India (NPCI).
The PayU-BillDesk tie-up builds on previous acquisitions PayU has made in India, including the acquisitions of CitrusPay, Paysense and Wimbo. Including BillDesk, Prosus said it has now invested more than $10bn in India’s fintech industry.
Bob van Dijk, group CEO of Prosus, said: “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.
“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.
“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.”
Financial inclusion focus
In India, once the two companies are combined, PayU and BillDesk intend to focus primarily on targeting underserved and underbanked customer segments.
According to the NPCI, there were 65bn electronic transactions across its payment systems for the year ending March 2022, a 72 percent increase compared to 2021 (excludes international card scheme transactions). This represents roughly 46 transactions per capita.
According to the Reserve Bank of India’s 2021 annual report, it expects more than 200m new users to adopt digital payment methods and for the average annual transactions per capita to reach 220. Based on current growth rates this ambitious target is possible.
“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 RBI,” said M N Srinivasu, co-founder of BillDesk.
“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.”
