We will be talking about acquisitions today. The economy has started recovering after the disastrous effects of COVID 19. The economy which was at halt, practically not working because of the lockdown which was imposed nationwide, and at a time in the whole world.
This had led to many businesses and startups being closed and shut down because they had no funds ( due to no customers )to operate their business. But now, after the passing of the second wave, the economy is back in action. We now hear the news of funding and acquisitions daily coming. We recently heard the news of acquisition, where the edtech startup Scaler Academy announced its first acquisition. It has acquired a Delhi based edtech startup Coding Elements for INR 8 crores.
Acquisition
Another piece of news relating to acquisition has come. The technology investor Prosus has announced on August 31,2021, that it will acquire BillDesk. The deal is expected to be worth USD 4.7 billion. After this acquisition, Porus also plans to combine BillDesk with PayU, which is its existing global fintech and payments business with a strong presence in India.
There have been rumours that the deal has been worked upon since July. The aim of this deal is to create a financial ecosystem which is responsible for handling 4 billion transactions in a year. This level is actually 4 times the current level of PayU in India.
The deal still has to clear the regulatory filings from the Competition Certificate of India (CCI) and is yet to take a professional acceptance from the Reserve Bank of India (RBI). This deal will be the biggest Merger and Acquisition deal in the fintech sector, when Indians are shifting towards online payments.
This proposed deal is all cash in, which makes this deal more attractive, and plus the factor that Porus is so much focused on the development of markets and especially India. According to Prosus, this deal is one of the biggest deals it has ever made. Post this deal, it is expected that the fintech market in the country will get a cumulative investment of more than USD 10 billion.
The combined entity of PayU and BillDesk after the merger, will come out to be one of the top online payment providers both globally and locally, with an annual Total Payment Volume (TPV) of USD 147 billion.
Post the merger, BillDesk and PayU are expected to work independently and the founders of BillDesk will continue in the new setup. The deal has been a part of long-term strategy for Porus that goes 10 years back and that involves a large number of other acquisitions and investments in the startups.
About BillDesk
Founded in 2000 by M.N. Srinivasu, Ajay Kaushal, and Karthik Ganapathy, BillDesk is an Indian online payment gateway. These 3 founders were working with an American Accounting firm Arthur Andersen LLP.
The funds raised by BillDesk are as follows-
2001- BillDesk received its first investment from SIDBI Venture Capital Ltd and Bank of Baroda
2006- BillDesk received investment of USD 7.5 million jointly from Clearstone Venture Partners and State Bank of India
2012- BillDesk received an undisclosed investment from US- based PE firm TA Associates
2015- BillDesk received an investment of USD 200 million from General ATlantic and Temasek. After this funding, the value of the company had increased to USD 1 billion.
General Atlantic still remains the largest shareholder in BillDesk holding 35% of the stake in the company.
The mission of the company is-
Making payments simple, secure, and convenient
It is the largest payments solution provider in the country, and it aims to-
a) Make payments accessible and easy for all
b) Build and operate payment platform for businesses, governments, and financial institutions
c) Accelerate growth and digital transformation of the partners through scalable payments solution
The solutions provided by the company are –
Building trusted, sustainable, and scalable solutions
The solutions offered by the company across the payment value chain are-
a) Accept payments – It allows the customer to choose their method of payment according to their choice
b) Make payments- Customers enjoy the capability to pay various different organizations from the platform
c) Collect payments- Customers can set up their standing instructions using their chosen payment method
The company has the best in class technology
Simplifying technology, enabling scalability
The technology is there to support the needs of the customers-
a) State-of-the-art digital payments- It helps the partners in making a difference in the rapidly evolving digital world
b) Core Payment stack- It provides a scalable, secure, and compliant platform with APIs to all financial systems
c) In-house infrastructure management- It ensures availability and compliance with regulations
According to the business estimates, BillDesk has the largest share of business clients among the payment gateways in India and handles 50-60% of the billing transactions.
The company partners with startups, large corporations, MNCs, across different sectors to provide dedicated and comprehensive solutions. Some of the partners of the company are- Google Pay, Kotak, Paytm, Mirae Asset, PNB Met Life, Tata Sky, Axis Bank, Canara HSBC, UTI Mutual Fund, Ola Money, AVIVA, Torrent Power, HDFC Bank, Amazon Pay,SBI, CitiBank, ICICI, MediBuddy, HDFC ERGO, Microsoft , and many others.
The investors of the company are- General Atlantic, March Capital, VISA, TA Associates, Temasek, and Clearstone. According to the disclosures made by Prosus, BillDesk had a gross revenue of USD 253 million in the Financial Year 2021, and its earnings before tax, interest, depreciation,and amortization was USD 42 million.
The closest competitors of the company are Razorpay and CC Avenue, owned by Infibeam. They have an estimated annual Total Payment Volume (TPV) of more than USD 50 billion and USD 18-20 billion respectively.
About the founders of BillDesk
M.N. Srinivasu, is the co-founder of BillDesk. He is an MBA graduate from IIM Ahmedabad and a Bachelor’s degree in Commerce from Madras University. Before BillDesk, he has worked with ITC Limited and Arthur Andersen, India.
Ajay Kaushal is the co-founder of BillDesk. He is a graduate from IIT Madras and PGDM from IIM Lucknow. He has been awarded the Distinguished Alumnus Award from IIT Madras in 2021. He is an eminent speaker. Before BillDesk, he has worked with SBI Capital Markets and Arthur Andersen.
Karthik Ganapathy is a graduate from IIT Bombay and an MBA from IIM Bangalore. He has been the man responsible for the key architect of the technology and operations of BillDesk. Before BillDesk, he worked with Arthur Andersen.
About PayU
Founded in 2002 under the parent organization Naspers, PayU is a fintech company that is engaged in providing payment technology to online merchants. The Hoofddorp, Netherlands, headquartered company allows businesses to accept and process payments through payment methods that can be integrated with web and mobile applications.
The investments and acquisitions of PayU are as follows-
It acquired an Israel based startup Zooz, that provides API to merchants
In September 2016, it acquired Citrus Pay, an Indian payments service provider, for USD 130 million.
It invested €110 million in a machine learning based underwriting German fintech company, Kreditech
It has led a funding round of USD 115 million in a Seattle-based remittance company, Remitly
It has invested USD 3.7 million in the Series A round of funding in ZestMoney, which is a provider for consumer finance for online purchases
In May 2017, it has invested USD 5.3 million in Paysense
It has made an investment of R$ 60 million in Credits, an online credit platform
In 2011, it acquired Romanian online payments company GECAD ePayments
In 2019, it acquired US based digital financial security firm Wibmo for USD 70 million
In 2019, it acquired Turkish digital payments company Iyzico for USD 165 million
It 2020, it acquired a fintech startup PaySense for USD 185 million
The partners of the company are- WIX, Shopify, ZOHO, Tally- Power of Simplicity, Quick eSelling, Shopmatic, Magengto, and many others.
PayU claims that when a business signs up to be a partner with it, then the business spends less time maintaining the payment system and has more time to give to core businesses and product experiences. The benefits which a company gets in partnering with PayU are-
a) Quick and easy API integration
b) Express Client Onboarding
c) Get rewarded for every successful referral
d) Dedicated accounts manager
The company globally had a gross revenue of USD 499 million and EBITDA of USD 15 million.
What is said about the deal?
The group CEO of Prosus, Bob van Dijk, said that it is expected that the deal will be closed by February 2022 with all necessary approvals in place.
M.N. Srinivasu of BillDesk said that investment by Prosus expands the significant opportunity in India for digital payments which is being improved by innovation and the progress regulatory framework which have been put into place by the Reserve Bank of India(RBI). He further said that the Indian digital payment is changing and the investment will help in moving forward.
The future will tell us what unfolds with this deal. We can just wish luck and a good future.
Edited by Sanjana Simlai.
