PayU owner Prosus cancels $4.7-billion BillDesk acquisition

Prosus NV, the owner of PayU, has terminated a $4.7 billion (about Rs 38,400 crore) deal to acquire Indian payments firm BillDesk after “certain conditions were not met.”

This would have been the largest acquisition by Prosus. But the Dutch e-commerce company issued a statement saying certain conditions precedent were not met by the September-end deadline.

Approval of the Competition Commission of India (CCI) was one of the conditions precedent. Prosus received it on September 5, but did not specify which other conditions were not met.

A condition precedent is a stipulation that defines certain conditions that must either occur or be met by either party to ensure the progress or execution of a contract.

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A giant that wasn’t born

The amalgamation of BillDesk and PayU would have created a digital payments giant with an annual total payment volume (TPV) of $147 billion.

The closest rivals in India, such as Razorpay and the Infibeam-owned CCAvenue, are estimated to have an annual TPV of over $50 billion and $18–20 billion, respectively.

Prosus had on August 31, 2011, announced the acquisition of BillDesk to expand its footprint in India’s booming fintech sector under the umbrella of its payment gateway PayU.

No break fee was associated with the deal. A break fee is a fee paid to a party as compensation for a broken deal or contract failure.

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“Committed to the Indian market”

Prosus, majority owned by South African multinational Naspers, serves more than 450,000 merchants with over a hundred payment methods. Prosus has been a long-term investor and operator in India, investing close to $6 billion in technology companies such as Swiggy and Pharmeasy since 2005, it said.

BillDesk, founded in 2000 by three consultants from Arthur Andersen LLP—MN Srinivasu, Ajay Kaushal, and Karthik Ganapathy—benefited from a surge in growth in digital payments. The founders would have collected $500 million each from the deal.

“Certain conditions precedent were not fulfilled by September 30, 2022…and the agreement has terminated automatically in accordance with its terms and, accordingly, the proposed transaction will not be implemented,” said the Prosus statement.

The company remains committed to the Indian market and growing its existing business within the region, the statement added.

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India’s grand old gateway

Launched when the term “fintech” did not even exist, BillDesk has the largest roster of business clients among payment gateways in India.

It provides solutions such as settlements, collections, reconciliations, and auto settlements. It also partners with companies in billing, utility payments, direct-to-consumer procurement, government payments, financial services, and telecom.

BillDesk has private equity firm General Atlantic as its single largest shareholder, with a holding of about 14.2 per cent. TA Associates hold a 13.1 per cent stake, while Visa has 12.6 per cent stake in the firm. The three founders hold close to 30 per cent shares.

(With agency inputs)