Prosus terminates PayU's $4.7 billion deal to acquire BillDesk

Prosus had, on 31 August 2021, announced the $4.7 billion acquisition, which was to be the country's second-largest deal in the e-commerce sector after Walmart’s  $16 billion acquisition of Indian e-commerce major Flipkart in 2018. 

"PayU secured CCI approval on 5 September 2022. However, certain conditions precedent were not fulfilled by the 30 September 2022 long stop date, and the agreement has terminated automatically in accordance with its terms and, accordingly, the proposed transaction will not be implemented," Prosus said in a stock exchange filing. The company didn't elaborate on the conditions that were not met.

Founded in 2000 by MN Srinivasu, Ajay Kaushal and Karthik Ganapathy, BillDesk focuses on making, accepting and collecting payments.

Besides facilitating over 170 payment methods as a payment aggregator, it provides biller network solutions through the Bharat Bill Payment System (BBPS) and enables the collection of recurring payments.

BillDesk enjoys a 25-30 per cent market share in the online payment aggregator space, followed by Razorpay at 15-20 per cent. PayU is the third largest player with a share of 10-15 per cent, according to estimates.

Other players in the space include CCAvenues, Paytm, Pine Labs. Offline players like MSwipe and PhonePe, too, are planning to launch their own payment gateways.

While BillDesk has a stronghold in government and Banking, Financial Services and Insurance (BFSI) segments, PayU is the go-to payment gateway for several online businesses.

BillDesk's investors include Visa, General Atlantic, Temasek Holdings, among others.

The Competition Commission of India (CCI) approved the deal on 5 September after weeks of delays and additional queries.

The termination of the deal after a year presents a challenge for BillDesk to give an exit to its investors, while slows PayU's growth plans in the Indian payments space.

According to PayU, the two entities combined were expected to process Total Payment Values (TPV) of $147 billion as per numbers for the financial year 2020-21. The gross revenues of both entities as per FY21 numbers stood at $752 billion.

The deal, which would have raised the company's total investment in India to $10 billion, was seen as the beginning of consolidation in the growing and fragmented payments space, which is also seeing players shift from only online or offline offerings to providing omnichannel products to merchants.