In a major consolidation in the payments sector, Prosus-backed PayU has acquired payments company BillDesk for $4.7 billion. The deal will bring Prosus’ cumulative investment in the Indian tech sector to more than $10 billion.
Prosus says that the acquisition of BillDesk will see PayU become one of the leading online payment providers globally, handling a total payment volume (tpv) of $147 billion. Together, the two payments players expect to create a financial ecosystem handling four billion transactions annually – four times PayU’s current level in India.
BillDesk was founded in 2000 by MN Srinivasu, Karthik Ganapathy and Ajay Kaushal. The platform allows customers to use net banking or cards to pay their bills online by tying up with utility service providers and connecting them with banks through a payment gateway.
The company had received in-principle approval from the Reserve Bank of India to operate as a Bharat Bill Payment operating unit under the Bharat Bill Payment system. It had raised funding from TA Associates, General Atlantic, Clearstone Venture Partners, Singapore’s state-held firm Temasek Holdings and Visa. All these investors will now exit since this is a 100 percent buyout of BillDesk by PayU. Previous acquisitions by PayU in India include Citrus Pay, PaySense and Wibmo.
As the startup economy is flush with capital and as the sector matures, there has been increased M&A activity. But over the past several months, many startups are now facing a new clause in their deals – earnouts. What are earnouts? It is a contractual mechanism used in M&A whereby, in addition to an upfront payment, future payments are promised to the seller of the business on the achievement of specific milestones. Earnouts are typically “earned” if the business acquired meets certain financial or other milestones after the acquisition is closed.
Recently BYJU’s acquired edtech player Great Learning in a transaction valuedVaryVari at $ 600 million comprising cash, stock and earnout. The founder of Great Learning had told CNBC-TV18 that the earnout was linked to the company’s performance for the next three years. Many more deals are now featuring earnouts. CNBC-TV18 spoke to Moksha Bhat, Partner, AP & Partners, to talk about this trend.
Management consulting firm Kearney has published a paper in which it has outlined a $40 billion market opportunity in value-ecommerce in India, driven by the move of India’s value-conscious buyers online. This estimates a 10-x growth in the value ecommerce market in under 10 years. To discuss these trends, the Startup Street team caught up with Siddharth Jain Partner of Kerney India
Also on the show, India’s largest micro-mobility platform Yulu is betting big on the goods delivery space and learning from its successful pivot from people to goods mobility during the pandemic.
Yulu has also launched a new product for gig workers. In an exclusive conversation with my CNBC-TV18, Yulu co-founder RK Misra talks about the company’s expansion and profitability road map as well as the policies needed to further penetration of electric shared mobility.
For all the interviews and discussions, watch the accompanying video