PayU Ends $4.7 Bn BillDesk Deal Over Unfulfilled M&A Conditions

The Netherlands-based Prosus NV, the parent of fintech major PayU, on Monday (October 3) announced termination of its $4.7-Bn deal to acquire Indian payment gateway company BillDesk. 

In a statement, Prosus said the deal was terminated as some of the conditions were not fulfilled.

“…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,” the statement said without clarifying what the conditions were.

The deal, the largest in the Indian digital payments space, was announced in August last year. However, it immediately ran into difficulties as PayU’s competitors reached out to the Competition Commission of India (CCI) raising concerns that the acquisition would cause a direct monopoly in the segment. 

Following this, the fair trade regulator sought additional information about the deal from the companies.

PayU submitted a revised merger plan with the CCI in April this year, sharing details about markets that it was operating in and explaining the impact on those markets as well as its competitors following the deal.

Following this, the competition watchdog finally approved the deal last month.

BillDesk would have been the fourth acquisition of PayU in the Indian business ecosystem if the deal had gone through. 

PayU had earlier acquired three firms – digital payment firm CitrusPay for $130 Mn, online payment processor Wibmo for $70 Mn, and bought a controlling stake in digital lending platform PaySense for $185 Mn.

Global consumer internet group Prosus is an active investor in the Indian market and claims to have invested about $6 Bn in the Indian technology sector since 2005. 

BillDesk was founded in 2000 by M N Srinivasu, Ajay Kaushal and Karthik Ganapathy. It essentially offers digital payment services such as online payment settlements, reconciliations, and auto-settlements, among others, to business organisations. 

BillDesk competes with the likes of Razorpay, Easebuzz and Paytm Business in the digital payments space. 

According to an Inc42 report, the Indian fintech industry is projected to grow to a $1.3 Tn market by 2025, expanding at a CAGR of 31% between 2021 and 2025. The digital payments subsector is estimated to account for $208 Bn or 16% of this market by 2025.