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India’s largest fintech M&A deal falls through: PayU calls off BillDesk buy

The biggest merger & acquisition (M&A) deal in the Indian financial technology space has fallen through, with Prosus-backed PayU calling off the acquisition of BillDesk. The acquisition, for a total consideration of $4.7 billion, had been announced on August 31, 2021.

In a statement issued on Monday, Prosus said: “Closing of the transaction was subject to the fulfilment of various conditions precedent, including approval by the Competition Commission of India (CCI). PayU secured CCI approval on September 5, 2022. However, certain conditions precedent were not fulfilled by the September 30, 2022, long stop date, and the agreement has terminated automatically in accordance with its terms and, accordingly, the proposed transaction will not be implemented.”

On August 31, 2021, Prosus had announced that an agreement had been reached between PayU Payments Private Limited (PayU), a subsidiary of Prosus, and the shareholders of the Indian digital payments provider BillDesk.

While the deal got a go-ahead from the CCI only in September, it was yet to receive the approval of the Reserve Bank of India (RBI). The process was to take at least 45 days.

Prosus, a long-term investor and operator in India, has invested close to $6 billion in Indian technology companies since 2005. It said it remained committed to the Indian market and growing its existing businesses within the region. Some of its other investments include Meesho, Byju’s, DeHaat, Mensa Brands and Good Glamm Group.

This acquisition would have made PayU the biggest player in the digital payment (B2B) segment. At the time of acquisition announcement, PayU India head Anirban Mukherjee had told Business Standard that the synergies of both the companies would lead to more new products being launched in the market.

“We do know where some of the synergies are. For instance, they are very strong in bill payments in the government and financial services.

We are much more focused on e-commerce and SMEs. There are synergies where their products apply to our customers and vice versa. Like LazyPay can go into their checkout pages. The bigger conversation will happen once we close this deal. I feel this type of scale can drive a different level of innovation and access to the market. We have a lot of complementary strengths and I am hoping that we will have lots of ideas on taking this to drive digitisation of the last mile much faster in India,” he had said.

During the announcement, PayU had estimated that the combined entity would process total payment values (TPV) of $152 billion based on FY21 numbers. BillDesk is one of the largest players in the payment aggregator space, especially with its early-mover advantage as well as a strong hold in the utility payment space. Industry estimates suggest BillDesk’s market share to be in the 25-30 per cent range. The second-largest players is Razorpay, with a share of around 20 per cent.

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