PayU to acquire BillDesk in $4.7 billion deal

Prosus NV, the Dutch unit of Naspers Ltd, has acquired Indian payment services provider BillDesk for $4.7 billion in cash in its largest acquisition.

The Amsterdam-based company’s PayU unit agreed to buy BillDesk to create a company that will handle a total transaction volume (TPV) of $147 billion in India. The acquisition will also give PayU access to BillDesk’s large customer base of small merchants in India.

On completing the transaction, Prosus’s cumulative investment in India will nearly double to more than $10 billion.

The deal is the second-largest inbound acquisition in the tech space after Walmart Inc.’s acquisition of Flipkart for $16 billion in 2018. It’s also the largest acquisition in India’s fintech sector.

Prosus has been strengthening its position in India’s payments industry through PayU India. BillDesk marks PayU’s fourth acquisition in the last five years after it snapped up payments technology company CitrusPay in 2016 for $160 million.

It then acquired digital credit platform Paysense in 2020 for $185 million, which now powers its consumer lending aspirations in India.

“The acquisition cements our position as the leading payments provider in India and is the strong example of the ecosystem we are building to serve various communities,” Bob van Dijk, group chief executive officer of Prosus, said in a conference call with reporters on Tuesday.

Prosus’s latest investment is expected to give exits to founders who own 30.84% in BillDesk along with key investors, including General Atlantic, TA Associates, Temasek and Clearstone.

The transaction, subject to approval from the Competition Commission of India (CCI), is expected to close by the first half of 2022.

BillDesk, founded in 2000 by M.N. Srinivasu, Ajay Kaushal and Karthik Ganapathy, has raised more than $240 million to date and was last valued at $1.8 billion in 2018.

BillDesk founders will continue with the firm.

The BillDesk acquisition will make PayU one of the largest players in India’s fintech payment ecosystem.

In addition, it will provide PayU access to BillDesk’s large merchant base, as the former looks to cross-sell products, including business lending.

Prosus has invested close to $6 billion in India and backed several companies, including online classifieds platform OLX, online tutoring company Byju’s, food delivery service provider Swiggy, and e-commerce giant Flipkart.

While PayU largely powers online payments for e-commerce companies, BillDesk’s strength lies in the bill payments and small merchant ecosystem.

Together, the two expect to create a financial ecosystem handling four billion transactions annually, four times what PayU processes in India.

Payments for domestic and cross border transactions is one of the major revenue units for PayU globally.