SUMMARY
BillDesk is looking to sell its business due to the rising competition in the digital payment services space
In the financial year 2020, the company had noted 15% increase in its profit to $20.9 Mn
BillDesk has the largest roster of business clients in India and handles 50-60% of billing transactions
Domestic payment gateway BillDesk is once again looking for buyers, after an unsuccessful attempt in 2018.
According to a Mint report citing sources, there are two major reasons to sell off the business. Firstly, the demand for digital payment platforms and ewallets embedded with ecommerce benefits has increased significantly over the past year, but BillDesk has stuck to its payment gateway which enables only banking and merchant website transactions. This has pulled BillDesk behind competitors which offer an end-to-end payments solution suite.
Secondly, private equity investors, especially the largest stakeholder in BillDesk, General Atlantic, has also been tilting towards companies to offer more customer-facing digital payment and ecommerce services.
All BillDesk promoters are also trying to sell off the entire business, and have called at least eight investment bankers including Goldman Sachs, J P Morgan and Morgan Stanley. Besides this, General Atlantic, who is the largest shareholder in the company, will also be part of this discussion to shortlist a buyer. BillDesk and its promoters also held its first meeting earlier this week, and will discuss a detailed plan about the sell off next week.
Founded in 2000 by three former Arthur Andersen executives — M N Srinivasu, Ajay Kaushal and Karthik Ganapathy. BillDesk is one of the rare profitable internet companies in India. In the financial year 2018, the company had reported a revenue of $132.6 Mn (INR 929 Cr), registering a 15% increase in its profit to $20.9 Mn (INR 148 Cr). Overall, the company had reduced its expenses by 77% to reach $25.2 Mn (INR 177 Cr). BillDesk has the largest roster of business clients in India and handles 50-60% of billing transactions.
The company is backed by Visa, TA Associates, General Atlantic, venture capital firm Clearstone Venture, and Singapore’s state-held investor Temasek Holdings. American financial service Visa had invested in BillDesk at a $1.8 Bn valuation in February 2018. General Atlantic holds around 35% in BillDesk.
BillDesk’s competitors include TechProcess Payment Services, Razorpay, Airpay, Oxigen, PayUbiz, Paytm, Instamojo, CCAvenue, PhonePe and Payworld. According to the Ministry of Corporate Affairs (MCA) filings accessed by Inc42, Razorpay has recorded a 30% or 2.4x growth in its operating revenues from INR 90 Cr in FY18 to 193 Cr in FY19. In terms of the revenue generated INR 197 Cr in FY19, compared to INR 92 Cr in FY18. The company’s losses have reduced by 74.5% from INR 12.8 Cr in FY18 to INR 3.26 Cr in FY19.
