In a mega deal, Prosus-owned PayU acquires BillDesk for $4.7 Bn

Payu, owned by Prosus, has acquired BillDesk for $4.7 billion, in what is easily one of the biggest deals in India’s fintech space. 

The proposed deal is subject to approval from India’s competition watchdog and builds on previous acquisitions by PayU in India, including CitrusPay, Paysense and Wibmo. Existing investors in Billdesk include Visa, General Atlantic, TA Associates, Clearstone Venture Partners and Singapore state investment firm Temasek.

What makes this deal even more significant is that the over 20 year old BillDesk is one of the oldest payment gateways in India and powers close to 60% of the country’s online bill payments. It competes with the likes of CCAvenue and Razorpay. The firm can rightfully claim to have made a business out of bill payments in India, and at last count, was processing payments for over a 100 billers in India. 

“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,” Prosus said in a press statement on Tuesday.

Prosus expects that together, Payu and BillDesk will become one of the leading online payment providers globally, handling a total payment volume (TPV) of $147 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.

Once the deal is completed, it would bring Prosus’s cumulative investment in Indian tech to more than $10 billion.

Last year in July, financial daily Mint had reported that BillDesk was open to buyers at a valuation of $2.5 billion. Perhaps, in the funds flush environment today, it was only a matter of time before the promoters got an offer they couldn’t refuse. 

Billdesk’s three founders, MN Srinivasu, Ajay Kaushal, and Karthik Ganapathy had refuted the news at the time.  With competition from much younger firms with oodles of funding, Billdesk, which has raised about $160 million in total since its inception, might have timed this exit to a nicety. 

As per Prosus, for the financial year ended March 2021, PayU’s TPV increased 51% year-on-year to $55 billion across India, Latin America and the EMEA region. 

In FY20, BillDesk’s operating revenue had increased by 28.5% to Rs  1,804.7 crore ($245 million) during FY20 from Rs 1,405 crore ($195 million) in FY19.

Billdesk generated 65.5% of the topline through electronic transaction processing fees, which grew by 19.8% from Rs 993.5 crore ($135 million)in FY19 to Rs 1,190.3 crore ($165 million) in FY20. Importantly, earning from its loyalty points management platform stood out as the second-largest source of revenue, making up 23% of the collections.

PayU has also been on an investing spree lately. Last week, Indiagold, a gold-centric lending startup, said it had scooped up $12 million in its Series A round led by PayU and Alpha Wave Incubation.

In March, PayU also led a $23.4 million financing round in offline to online commerce and payments platform Dot. In December 2020, it led a $7 million round in wealthtech company Fisdom.