Payments company PayU is reportedly in talks to acquire digital lending platform PaySense, in a cash and stock deal. According to a media report, this deal will peg PaySense’s valuation to $60-70 Mn.
Naspers’ PayU has also invested around $11.5 Mn in PaySense’s Series B round in 2018. 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. Some of the company offers include aspirational ecommerce purchases, family vacations, home renovations, and a medical emergency.
Till date, PaySense has raised around $25.6 Mn, from investors like PayU, Nexus Ventures, and Jungle Ventures.
Siddhartha Jajodia, Global head of PayU had earlier said in a media statement, “PaySense is leveraging the IndiaStack platform very well to create additional capabilities beyond those of the traditional credit bureaus to generate strong underwriting of retail loans. With our investment in PaySense, we intend to tap into the emerging middle class of India and provide them with easy access to formal credit.”
Is PayU Expanding Its Lending Business?
The report noted that the acquisition of PaySense will allow PayU to build a full-stack lending ecosystem. Other than the company’s earlier investment in PaySense, it had also made an $6.5 Mn investment in another lending company ZestMoney.
Earlier this month, PayU has also invested about $7 Mn in its lending business PayU Finance, which goes by the brand name LazyPay. It offers personal loans upto INR 1 Lakh and can be used for purchasing through various sites such as Swiggy, MakeMyTrip, Flipkart and more.
PayU India has recorded a revenue of $84.8 Mn (INR 588 Cr) for the period ending March 2018, from $44.35 Mn (INR 311 Cr) in the last year, which is a hike of 92%. During the period, LazyPay had gained significant traction reaching over 450K consumers and issuing more than $4 Mn (INR 28.3 Cr) in loans per month.
Also in April, PayU has acquired Bengaluru and Cupertino-based online payment company Wibmo for $70 Mn. With the acquisition, PayU claimed to be looking to accelerate its credit business by leveraging big data to power credit on various online and offline merchants.
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 makeup 85.7% of the total $6.97 Bn funding in Indian fintech startups in the same period.
Other players in the consumer lending space include PerkFinance, ShubhLoans, Propelld, Paytm, ETMONEY, and more. Amidst the crowded digital lending sector, PayU directly competes with startups such as Sachin Bansal-backed Kissht, Simpl, and ePayLater.