Updated: September 2, 2021 11:10:38 am
When it came to a decision on whether to go public or raise investments from a specialised partner to chart out the next phase of growth for what was arguably India’s first pure play ‘fintech’ that now handles more than half of the country’s online billing transactions, co-founders of BillDesk MN Srinivasu, Ajay Kaushal and Karthik Ganpathy, along with their other investors, decided on the latter option. A bet different to what Paytm, one of its biggest rivals in the payments gateway segment, seems to have taken as it gears up for its proposed $2.2 billion IPO.
On Tuesday, Dutch conglomerate Prosus announced 100 per cent acquisition of BillDesk for $4.7 billion. Prosus operates in India’s fintech space through its unit PayU. Post the acquisition, the two brands will continue to operate separately at least for some time, given the deep relationships each of them have with their merchants and banks. For the three co-founders, the deal presents an opportunity to run their business at an even higher scale with backing of a deep-pocketed investor like Prosus, as they plan to stay on even after selling their stakes.
Through the deal, the co-founders who started the company more than 20 years ago, find an exit for their 29.6 per cent stake that they held in BillDesk, estimated to be worth around $1.4 billion. The company’s other institutional investors were General Atlantic, Temasek Holdings, Visa, TA Associates, March Capital and Clearstone Venture Partners.
“Both 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,” a PayU spokesperson said. “The existing PayU India management team will remain in charge. However, they will, post-closing, be able to draw on the 20+ years of expertise provided by the leadership of BillDes,” they added.
While Srinivasu is an alumnus of IIM Ahmedabad, Kaushal holds a degree from IIM Lucknow and Ganpathy from IIM Bangalore. The three were colleagues at consulting firm Arthur Anderson in Mumbai. Ganpathy was the first to join the consultancy in 1995, followed by Kaushal in 1997 and Srinivasu in 1999. But at the turn of the millennium, they decided to quit the firm and begin their entrepreneurial journey.
Right before they started BillDesk, in 1999, several large banks in the country were rolling out core-banking solutions to enable their customers to avail of services without visiting their home branches. Eventually, a plan was chalked out to target the payments ecosystem, in which BillDesk would be the bridge between banks and various merchants — at the time this was mainly utilities such as electricity boards, telephone companies, water boards, etc. In this case, the customer acquisition was left to merchants or banks and BillDesk would make a commission from these merchants or banks on each transaction.
In 2001, the company launched its Electronic Bill Presentment and Payment product with state-owned Bank of Baroda and in 2003, it launched the payments aggregation system that would bring together several different options to transact online. Only a few years later, the company turned profitable, and in 2019 it hit a cumulative payment volume of Rs 3 trillion. Today, BillDesk handles more than half of the country’s online billing transactions. PayU expects that the group entity post the deal would handle over $147 billion in annual transaction volumes, while currently BillDesk already handles $90 billion transactions a year.
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