Naspers-backed PayU in race to buy BillDesk; set to be 2nd largest Indian internet deal after Walmart-Flipkart acquisition

Fintech giant PayU, which is backed by one of the world’s top technology investors Naspers, is one of the multiple suitors in talks to acquire top domestic payment gateway firm BillDesk in a mega transaction, which if sealed, would be the biggest in the Indian internet space since the disruptive $16 billion buyout of Flipkart by Walmart, multiple industry sources with knowledge of the matter told Moneycontrol.

“PayU has held discussions to buy a 100 percent stake in BillDesk which is on the block. But there are other suitors as well in the fray. So nothing has been frozen as yet. The sale of BillDesk would be a game-changing moment for the Indian payment gateway segment, “ one of the persons cited above told Moneycontrol, warning that the ongoing talks may or may not necessarily fructify into an eventual transaction.

“The proposed transaction, which may be struck for a premium valuation between $3.5 billion to $4.5 billion, would provide an exit to the founders as well as to the existing private equity investors Temasek and General Atlantic,” said a second person.

“A suitor like PayU would get multiple benefits from this potential big bet in India – technology and backend infra of the target, the size and scale of the business since it has the first-mover advantage, the volume of transactions and the merchant base, both government and otherwise,” a third person told Moneycontrol.

Moneycontrol could not independently confirm the names of other potential suitors in the fray for the proposed deal.

A fourth person confirmed ongoing discussions between both parties.

All the four persons cited above spoke on the condition of anonymity.

In response to an email query from Moneycontrol, a Naspers spokesperson said, “ At a Naspers level, we never comment on market rumour or speculation. Our standard response is as follows; It is the company’s policy to neither acknowledge nor deny its involvement in any merger, acquisition or divestiture activity, nor to comment on market rumours.” PayU did not respond to an email query from Moneycontrol.

General Atlantic declined to comment while a spokesperson for Temasek said, “As a matter of policy, we do not comment on market speculation and rumours." Moneycontrol is awaiting an email response from BillDesk and its founders and has sent reminders. This article will be updated as soon as we hear from them.

Founded in 2000, by a team of ex-Arthur Andersen professionals, BillDesk provides a single versatile, scalable payments platform for enterprise-wide electronic payments and collections, related reconciliation and settlement operations, across multiple delivery channels and using a wide range of payment methods.

According to its website, the firm is the trusted partner of India's largest institutions, and its technology, payments services and extensive processing network are used by India's largest banks and many of India's organisations across diverse industry segments such as telecom, insurance, utilities, financial services, education, entertainment and e-commerce businesses. The BillDesk platform processes a majority share of the online and mobile payments transactions that are conducted through aggregator platforms, in India.

The firm is a service bureau offering billers, banks and customers a comprehensive bill presentment, payment and management service. Using BillDesk technology, customers can receive and pay all their bills from one location and billers can benefit from reduced processing expenses and improved customer service from online presentment and payment of bills.

It is a financially independent company and is monitored as a participant under the Payments and Settlements Systems Act, 2007 (Act 51 of 2007) that is regulated and supervised by the Reserve bank of India. BillDesk's investors include TA Associates, Clearstone Ventures, General Atlantic and Temasek.

PayU is a fintech company that provides payment technology to online merchants and is owned by Prosus, a global consumer internet group and one of the largest technology investors in the world. The company was founded in 2002 and is headquartered in Hoofddorp, Netherlands. It allows online businesses to accept and process payments through payment methods that can be integrated with web and mobile applications. Prosus has a primary listing on Euronext Amsterdam and a secondary listing on the Johannesburg Stock Exchange and is majority owned by Naspers.

PayU provides payment gateway solutions to online businesses through its premium technology. According to its website, in India, PayU serves more than 4,50,000+ merchants with over 100+ payment methods and is the preferred payment partner for e-commerce merchants, including all leading e-commerce companies and a majority of airline businesses.