Dutch consumer internet conglomerate Prosus NV, which is the parent company of Indian fintech company PayU, Monday said it has terminated its agreement to acquire Indian payment aggregator BillDesk. The $4.7 billion deal that was announced in August last year, would have become the biggest fintech M&A deal in India if it had gone through, and proposed to merge BillDesk with PayU India.
Notably, the companies had received approval from the Competition Commission of India (CCI) only last month.
‘Conditions not fulfilled’
“Closing of the transaction was subject to the fulfilment of various conditions precedent, including approval by the Competition Commission of India (CCI). 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 statement.
The company did not detail the unfulfilled conditions that led to the deal’s termination. An e-mail query sent to Prosus did not elicit a response.
The Indian Express reached out to BillDesk co-founder MN Srinivasu, but he did not respond.
On September 5, following the CCI approval PayU India said that the transaction involved “novel assessment by the CCI of dynamic digital markets”. “Prosus firmly believes that this acquisition of BillDesk will have significant pro-competitive benefits for the Indian economy and will strengthen the Indian digital payments market, which is fully regulated by the Reserve Bank of India. This acquisition by PayU of BillDesk is also consistent with the government of India’s Digital India mission and will benefit Indian merchants, government institutions and consumers,” Anirban Mukherjee, CEO, PayU India had said.
Among largest payment gateway aggregators
BillDesk, which was founded in 2000 by former consultants MN Srinivasu, Ajay Kaushal, and Karthik Ganpathy, is among the largest payment gateway aggregators in the country, handling more than half of all online billing transactions, according to industry estimates.
Prior to the announcement last year, where Prosus said it would acquire BillDesk, the Mumbai-based payment aggregator had also been in talks with other fintech giants for an acquisition, including Paytm.
The deal was expected to give an exit to BillDesk’s institutional investors — General Atlantic, Temasek Holdings, Visa, TA Associates, March Capital, and Clearstone Venture Partners — in addition to the three co-founders, who together held a 29.6% share in the company.
Payment aggregators like BillDesk essentially bring together various payment systems such as credit or debit cards, net banking, UPI, and wallets on a single platform for online merchants to offer to their customers.
According to industry estimates, BillDesk and Paytm together controlled a massive chunk of India’s payment gateway traffic. However, investors of BillDesk had been looking for an exit in the face of rising competition from, besides Paytm, a host of players including Infibeam, CCAvenue, PayU, and Razorpay. For the year ending March 2021, the company reported a net profit of Rs 271 crore, or around $37 million, making it a prime target for other payment businesses looking to grow inorganically.
PayU is present in several payment segments — gateways, wallet, credit services — and even in the non-banking financial company (NBFC) space. Along the way, it has acquired or invested in several fintech startups including CitrusPay, ZestMoney, PaySense, and Wibmo.
According to Prosus, which is a division of the South African multinational Naspers, the acquisition of BillDesk was to give a huge leg-up to PayU in India, with the post-deal group entity handling four billion transactions annually — four times PayU’s current level in India.