The company will also acquire a controlling stake in PaySense and all its assets at a valuation of $185 Mn
PayU will infuse a total of up to $200Mn in the startup in the form of equity capital
The platform will enable third parties to co-lend and borrowers to access credit seamlessly
PayU has announced plans to merge business operations of its consumer lending entity LazyPay and fintech startup PaySense to build a full-stack digital lending platform in India. Additionally, the company also announced that it will acquire a controlling stake in PaySense and all its assets at a valuation of $185 Mn.
PayU will infuse a total of up to $200Mn in the digital credit platform in the form of equity capital. Moreover, $65Mn of the total amount will be immediately invested and the balance corpus will be infused in the next 24 months to grow the loan book.
“Technology has the power to completely transform people’s access to financial services and the credit market in India is ripe for further digital disruption. This merger is the next step in our journey as we accelerate our vision for credit in India,” said Siddhartha Jajodia, Global Head of Credit, PayU.
According to the company’s statement, the merger is aligned with international payments business PayU’s long term vision of orchestrating a fintech ecosystem in India by partnering with the right companies and offering multiple financial services.
The unified digital credit platform of PayU, the payments and fintech business of Prosus, will enable third parties such as banks, NBFCs and alternate lenders to co-lend and grow assets and will also enable borrowers to access credit when and where they need it in a digital and seamless way.
“Providing more Indian consumers with access to credit is crucial to helping individuals grow and succeed. PayU is a natural partner for us as we both strive to make finance more simple, accessible and transparent,” said Prashanth Ranganathan, founder and CEO, PaySense.
As a part of the deal, Prashanth Ranganathan, currently PaySense CEO will lead PayU’s credit business in India as the CEO of the new enterprise. Prashanth will continue to retain a stake in the merged enterprise, while all the other investors and shareholders will exit.
“We continue to witness the massively untapped market potential for short-term collateral-free loans among the digitally savvy aspirational youth. Our endeavor is to facilitate easy digital credit options for this new-to-credit segment and support their ambitions,” said Sayali Karanjkar, cofounder, PaySense.
Founded in 2015 by Prashanth Ranganathan and Sayali Karanjkar, PaySense offers personal loans ranging from INR 5,000 to INR 2 Lakh, documentation and credit scoring of its users by leveraging the IndiaStack.
According to DataLabs by Inc42, payments tech startups accounted for 55.5% of the total fintech investments between 2014 and 2018. The top three fintech sub-sectors — payments tech, insurance tech and lending tech — combined make up 85.7% of the total $6.97 Bn funding in Indian fintech startups in the same period.
In October 2019, PayU announced that it has picked up a minority stake in Indian wealth management startup Fisdom for $11 Mn. This was a part of a funding round in which Fisdom’s current investors Saama Capital and Quona Capital also participated. With the investment, the company marked its entry into India’s wealth management segment. PayU’s other Indian portfolio includes fintech companies such as ZestMoney and CitrusPay and online payment processor Wibmo for $70 Mn.