Netherlands-headquartered parent company of PayU Payments, Prosus NV, has terminated the deal to acquire Indian payment aggregator BillDesk.
Announced by Prosus on August 31, 2021, the acquisition was to be the country’s second-largest internet deal after Walmart acquired Flipkart in 2018. It would have raised the company’s total investment in India to $10 billion.
“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.
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.
The Competition Commission of India (CCI) approved the deal on September 5 after weeks of delays and additional queries.
In an exclusive interview to Moneycontrol after the announcement of the acquisition in 2021, BillDesk’s Srinivasu had detailed the rationale behind the sale to PayU.
“Earlier in 2021, we began the process of evaluating how we go about doing an IPO. Some of our investors have been there with us for 15-16 years. So we had a responsibility towards how we provide liquidity to investors. When we were on the IPO path, we were reached out to by Prosus,” he had said.
“The interesting thing about Prosus is one, they have the right mix of financial investment and business strategy. Secondly, it provides us the necessary backing and impetus to grow. It also allows the right exit for shareholders who have been there for long.”
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.
According to industry estimates, BillDesk enjoys a 25-30% market share in the online payment aggregator space, followed by Razorpay at 15-20%. PayU is the third-largest player with a share of 10-15%, according to estimates.
Other players in the space include CCAvenues, Paytm, Pine Labs and offline players like MSwipe and PhonePe are too 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 an array of internet companies.
According to industry experts, the deal marked the beginning of the 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.
