There is more consolidation in the payments industry: Prosus, the Dutch tech giant, announced today that it will pay $4.7 billion for BillDesk, an Indian payments provider. Prosus will combine BillDesk and PayU, its global fintech and payments company, which has a strong presence here. Rumours of the deal have circulated since July.
PayU will be one of the largest online payment providers worldwide with $147 billion annually in payments. The all-cash transaction is not just a consolidation move in payments, but it also highlights Prosus' continued focus on India and developing markets. Prosus stated that this deal was one of the largest ever made by Prosus and will bring its Indian fintech holdings a cumulative investment value in excess of $10 billion.
This is part of a longer-term strategy that Prosus (and Naspers), has been following for nearly a decade. It also includes a number other acquisitions and investments into startups, including DotPe in the region and Indiagold.
Indian regulator Competition Commission of India will need to approve the proposed acquisition. Prosus and PayU executives spoke to reporters on Tuesday and said that they don't expect any obstacles in receiving approval, as PayU is a complementary business. India's biggest banks use BillDesks network, as well as a wide range of merchants in the telecom, insurance, travel, and telecom sectors.
Prosus' core business is payments and fintech. India remains Prosus' number one investment destination. Bob van Dijk (prosus group CEO) said in a statement. PayU was formed from a mix of interests in fintech, payments and other interests that Naspers (and later Prosus) acquired over many years. It is currently active in around 20 markets.
India is a large market for financial services. It has a growing middle class and digitally-savvy consumers.
PayU is a solid player in this market. PayU has proven to be highly competitive in India's online merchant acquiring market, both in terms of price and in-field sales efforts. PayU India holds a dominant position in the payments gateway market, where it has traditionally competed against CCAvenue and BillDesk (owned in part By Infibeam), and most recently Sequoia Capital India's RazorPay.
BillDesk was founded in 2000. Its investors included Visa, General Atlantic and the State Bank of India. PitchBook estimates that the company's value was $1.53 billion when it last raised capital in 2019. Tracxn estimates that founders owned less than 30% of the company before this acquisition.
BillDesk is a well-known contractor to many government departments. BillDesk is one of the companies that applied for NUE's license. This new network for retail payments in India is proposed to be a viable alternative to established UPI railroads. BillDesk has teamed up with Amazon, ICICI Bank and Axis Bank to apply for the license.
PayU India CEO Anirban Mokherjee suggested today on a conference call that Prosus might explore expanding BillDesks outside of India's second largest nation. However, he warned that a concrete decision has not been made yet.
Laurent Le Moal (CEO of PayU), stated that the transaction would stimulate innovation and competition in India's digital payments sector. This transaction will help India's digital economy to grow and provide financial services to people who might have been previously excluded. This vision aligns perfectly with the Government of India's vision of Digital India. It is a key goal for PayU in all communities that we serve worldwide.
PayU today announced that its domestic and cross border payments business was up 51% in March 2021 across its operations in India and Latin America. This is a sign of the global boom in digital payments that has occurred in the wake the Covid-19 pandemic.
PayU also operates credit solutions in India and five other countries. Prosus is an active investor as well. His stakes in Remitly, a remittance company, and other businesses represent a pipeline of strategic partnerships and potential future acquisitions.
