Prosus to acquire 100% equity in BillDesk, merge with PayU

Dutch tech giant Prosus today announced a $4.7 billion all-cash deal to acquire BillDesk, a payments provider based in India. Prosus, which already operates global fintech and payments app PayU, plans to combine BillDesk with PayU, which already has a strong presence in India. 

PayU Payments Private Limited (PayU), a subsidiary of Prosus, has entered into an agreement with the existing shareholders of IndiaIdeas.com Limited (BillDesk) to acquire 100 per cent of the equity in BillDesk, the company stated in a communication to shareholders. 
The proposed acquisition will make PayU one of the major online payment providers globally with some $147 billion in payment volume annually. 
Prosus said the proposed all-cash deal, one of the biggest ever made by Prosus, and one of the biggest M&A deals in India, will give its fintech holdings in India a cumulative investment value of over $10 billion.
The proposed acquisition will require approval from India’s anti-trust regulator Competition Commission of India (CCI). In a call with reporters on Tuesday, Prosus and PayU executives said they don’t expect much hurdle in receiving the approval as PayU and BillDesk offer complimentary businesses. BillDesk’s network is used by India’s largest banks and by a large number of merchants across utilities, telecom, insurance, mutual funds, travel and e-commerce verticals.
BillDesk, founded in 2000, caters to the needs of digital consumers, merchants and government agencies and enterprises in the country.
According to the FY21 annual report of the Reserve Bank of India (RBI), the number of transactions for digital retail payments in India has grown by more than 80 per cent from 24 billion in 2018-19 to 44 billion in 2020-21.
Over the next three years, RBI expects more than 200 million new users to adopt digital payments with the average annual transactions per capita rising ten-fold from 22 to 220.
PayU India and BillDesk run complementary businesses in the 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.
The proposed acquisition will require approval from India’s anti-trust regulator Competition Commission of India (CCI). In a call with reporters on Tuesday, Prosus and PayU executives said they don’t expect much hurdle in receiving the approval as PayU and BillDesk offer complimentary businesses. BillDesk’s network is used by India’s largest banks and by a large number of merchants across utilities, telecom, insurance, mutual funds, travel and e-commerce verticals.
“Payments and fintech is a core segment for Prosus and India remains our number one investment destination,” said Bob van Dijk, group CEO of Prosus, in a statement. PayU, formed out a combination of various interests in fintech and payments that Naspers (and Prosus) had acquired over several years, is currently active in some 20 markets.
Within that, PayU has positioned itself as a strong player. Specifically, it has been highly competitive in the Indian online merchant acquiring market – both on price and in-field sales effort. 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 has been around since 2000 and its investors had included Visa, General Atlantic, and 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 per cent 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 has teamed up with Amazon, ICICI Bank, Axis Bank, Pine Labs, and Visa for the licence.
Anirban Mukherjee, CEO of PayU India, suggested during an analysts call that Prosus may explore expanding BillDesk’s business outside of the world’s second most populous nation.
“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. “This will not only help to strengthen India’s digital economy, but also bring financial services to those who may have historically been excluded. This ambition is fully aligned with the Government of India’s vision of ‘Digital India’ and is a key objective for PayU across all the communities we serve globally.”
Closing of the acquisition is subject to satisfaction of customary conditions precedent, including approval by the Competition Commission of India.
PayU today said that its domestic and cross-border payments business as of March 2021 was up 51 per cent year-on-year across its operations in India, Latin America and EMEA, a mark of the overall boom that we have seen in the global digital payments market in the wake of the Covid-19 pandemic.
Other businesses that PayU operates include credit solutions across India and five other 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.