Biggest deal in fintech: Dutch group Prosus to purchase BillDesk for $4.7 billion

In the most important ever M&A deal in India’s fintech house, Dutch shopper Internet conglomerate Prosus, together with its monetary providers unit PayU, has agreed to purchase 100% stake in Mumbai-based cost aggregator BillDesk for $4.7 billion.
BillDesk, which was based in 2000 by former consultants M N Srinivasu, Ajay Kaushal, and Karthik Ganpathy, is among the many largest cost gateway aggregators within the nation, dealing with greater than half of all on-line billing transactions, in response to business estimates.
The deal may sign a recent wave of consolidation within the fintech sector within the run-up to the proposed $2.2 billion preliminary public providing (IPO) by India’s largest fintech firm, Noida-based Paytm.
Sources within the know stated discussions on the acquisition had been ongoing for the previous few months, with Paytm too having thought-about shopping for BillDesk.
The deal will give an exit to BillDesk’s institutional buyers — General Atlantic, Temasek Holdings, Visa, TA Associates, March Capital, and Clearstone Venture Partners — along with the three co-founders, who collectively held 29.6% share within the firm as of March 31, 2020. The deal is topic to regulatory approval, together with from the Competition Commission of India.

Payment aggregators like BillDesk primarily carry collectively numerous cost methods equivalent to credit score or debit playing cards, netbanking, UPI, and wallets on a single platform for on-line retailers to supply to their clients. According to business estimates, BillDesk and Paytm collectively managed an enormous chunk of India’s cost gateway visitors. However, buyers of BillDesk had been on the lookout for an exit within the face of rising competitors from, in addition to Paytm, a bunch of gamers together with Infibeam, CCAvenue, PayU, and Razorpay. For the yr ending March 2021, the corporate reported a web revenue of Rs 271 crore, or round $37 million, making it a first-rate goal for different funds companies trying to develop inorganically.

PayU is current in a number of cost segments — gateways, pockets, credit score providers — and even within the non-banking monetary firm (NBFC) house. Along the best way, it has acquired or invested in a number of fintech startups together with CitrusPay, ZestMoney, PaySense, and Wibmo. According to Prosus, which is a division of the South African multinational Naspers, the acquisition of BillDesk will give an enormous leg-up to PayU in India, with the post-deal group entity dealing with 4 billion transactions yearly — 4 instances PayU’s present stage in India.

In response to a set of questions on whether or not PayU would merge BillDesk into itself, and would retain the latter’s workers, a PayU spokesperson stated: “Both the BillDesk and PayU platforms will remain in use. At the moment, we have only agreed to the deal, and it is subject to regulatory approval. This deal is about growth and less about cost optimisation. For the moment, it is business as usual for PayU India and BillDesk, and it is far too early to discuss organisational structure”.
“The existing PayU India management team will remain in charge, however, they will, post-closing, be able to draw on the 20+ years of market expertise provided by the leadership of BillDesk to ensure an unparalleled experience for clients,” the spokesperson added.
The three co-founders of BillDesk have been colleagues at consulting agency Arthur Anderson in Mumbai, after they determined to begin their entrepreneurial journey. Several massive banks had on the time begun to roll out core banking options to allow clients to avail of providers with out visiting branches. This additionally laid the foundations of Internet banking in India, and Srinivasu, Kaushal, and Ganpathy noticed a chance in making a service that would help the lenders of their digital plans.
A plan was chalked out to focus on the funds ecosystem, by which BillDesk can be the bridge between banks and retailers — this was then primarily utilities equivalent to electrical energy and water boards, phone corporations, and so forth. Customer acquisition was left to the retailers or banks, and BillDesk would cost a fee on every transaction.
In 2001, the corporate launched its Electronic Bill Presentment and Payment (EBPP) product with state-owned Bank of Baroda and, in 2003, it launched the funds aggregation system that may carry collectively a number of choices to transact on-line. Soon afterward, the corporate turned worthwhile, and in 2019 it hit a cumulative cost quantity of Rs 3 lakh crore.
“BillDesk has been a pioneer in driving digital payments in India for well over a decade. This investment by Prosus validates the significant opportunity in India for digital payments that is being propelled by innovation and the progressive regulatory framework put into place by the Reserve Bank of India, India’s central bank,” Srinivasu stated.

According to RBI’s 2020-21 annual report, the variety of transactions for digital retail funds grew greater than 80% to 44 billion to 2020-21 from 24 billion in 2018-19. The Covid-19 pandemic resulted in a surge in on-line transactions. RBI expects greater than 200 million new customers to undertake digital funds over the following three years, with common annual transactions per capita rising 10-fold to 220 from 22 now.
Prosus stated the acquisition of BillDesk will see PayU deal with a complete cost quantity of $147 billion, making it one of many greatest on-line cost suppliers globally. During the yr ended March 31, 2021, PayU processed $55 billion in digital funds, 51% increased from the year-ago interval.
In an announcement, Bob van Dijk, Group CEO of Prosus, stated: “We have a long and deep relationship with India, having supported and partnered with some of its most dynamic entrepreneurs and new tech businesses since 2005. We’ve invested close to $6 billion in Indian tech to date, and this deal will see that increase to more than $10 billion.”
Prosus is invested in Indian shopper Internet corporations equivalent to Urban Company, Swiggy, Meesho, Byju’s, PharmEasy, and PayU India’s pay later unit LazyPay.