SUMMARY
As part of the deal, Rapyd, a fintech-as-a-service provider, will acquire PayU’s Global Payments Organisation
The transaction will enable PayU to focus on the large payments and fintech opportunity in India, where it is the leading payments provider, Prosus said
Innovation and progressive regulation are driving rapid change within the digital payments industry in India, and we see many new opportunities to further expand our business: Prosus CEO
The Netherlands-based investment firm Prosus on Monday said its fintech arm PayU is selling a part of its business to Israel’s Rapyd for $610 Mn to focus on the lucrative Indian market.
As part of the deal, Rapyd, a fintech-as-a-service provider, will acquire PayU’s Global Payments Organisation (GPO).
“The transaction will enable PayU to focus on the large payments and fintech opportunity in India, where it is the leading payments provider, serving more than 4,50,000 merchants and more than 2 Mn credit customers,” the investment firm said in a statement.
Prosus’s payments and fintech segment posted a consolidated revenue growth of 52% to $903 Mn in FY23, it added.
PayU’s GPO business provides advanced ecommerce payment solutions for global merchants in over 30 countries across Latin America, Central and Eastern Europe and Africa. It contributes around 30% to PayU’s overall revenue. In FY23, total payment volumes for GPO grew 12% year-on-year to $34 Bn.
Commenting on the development, Bob van Dijk, Prosus and Naspers CEO, said, “We are now fully focused on the huge fintech opportunity in India, where PayU is the leading payments service provider and is rapidly expanding its credit offering. Innovation and progressive regulation are driving rapid change within the digital payments industry in India, and we see many new opportunities to further expand our business there.”
“Overall, India’s digital financial services opportunity continues to be large and under-penetrated, offering healthy growth for the PayU India business. In areas like lending and digital credit products, where PayU India already supports 2 Mn customers and over 4,50,000 merchants, we see strong growth potential for the future,” said Laurent le Moal, CEO of PayU.
PayU India turned profitable in FY22, reporting a net profit of INR 126 Cr. Its total revenue rose 31% year-on-year (YoY) to $399 Mn in FY23.
PayU India enables businesses to collect online and offline payments via more than 150 payment modes, including debit cards, credit cards, net banking, BNPL, QR, UPI, EMIs, and wallets. It competes with the likes of Razorpay and Cashfree in India.
It must be noted that following the Reserve Bank of India’s (RBI’s) directions disallowing loading of non-bank prepaid payment instruments (PPI) with credit lines, PayU had to stop its digital bank offering, LazyCard, in FY23. This contributed to the largest part of the trading loss in PayU’s credit business, Prosus said earlier.
However, PayU India’s credit business issued loans worth $742 Mn in FY23, a rise of 47% YoY.
Last year, Prosus called off $4.7 Bn acquisition deal of BillDesk what would have been the second largest acquisition deal in India’s startup ecosystem.
The total addressable market for fintech in India is expected to reach $2.1 Tn by 2030, with a compound annual growth rate (CAGR) of 18% from 2022, according to an Inc42 report.
