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Largest Fintech Deal in India: CCI Clears PayU’s $ 4.7 Billion BillDesk Acquisition After 1 Year

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PayU & Billdesk Law Insider

Tanisha Rana

Published on: September 7, 2022 at 21:20 IST

The $4.7 billion purchase of online payment gateway firm BillDesk by Prosus-backed PayU India has received approval from the Competition Commission of India (CCI). The competition watchdog has ever allowed a larger merger in the fintech industry than this one.

PayU, the payments and fintech division of Prosus operating in more than 20 markets, will become one of the top online payment providers globally by payment volume as a result of the purchase, which was announced in August of last year.

Prosus’s investments in India will reach over $10 billion as a result of this agreement.

The CCI tweeted on Monday night, “Commission authorises purchase of 100% of the equity share capital of (BillDesk) by PayU Payments.”

The CCI-approved combination involved PayU Payments Private Ltd. acquiring 100% of the equity share capital of Limited (IIL), an unlisted company that utilises the name “BillDesk” as its trade, business, and brand name in India (PayU India).

Prosus N.V. (Prosus), a global consumer internet group listed on Euronext Amsterdam and one of the top global technology investors, indirectly owns shares of PayU India.

IIL’s main business is providing payment aggregation services, which let businesses (and other organisations) accept payments from clients using a variety of digital payment methods.

M N Srinivasu, Ajay Kaushal, and Karthik Ganapathy created BillDesk in 2000 with financial support from Clearstone, Visa, and Temasek.

In addition to payments and finance, Prosus’ major divisions include classifieds, food delivery, and education technology. India continues to be the company’s primary investment target.

Along with investing in payment and financial services, Prosus also invested in the pioneer in ed-tech Byju’s, the food delivery service Swiggy, and the home services provider Urban Company.

CCI Scrutiny

This BillDesk transaction is noteworthy since it is one of the select few instances in which CCI issued a show cause notice on a combination.

In a 30-page notice delivered at the end of July, CCI argued that the merger would likely have an appreciable adverse effect on competition (AAEC) and asked PayU to provide justification for why a phase-II probe (thorough investigation) should not be opened into the transaction.

Last Friday, the competition watchdog held an oral hearing with the parties involved about the response they provided to the notice.

Business Performance

PayU India’s revenues increased by 48% to $304 million in 2021–2022 owing mostly to an increase in overall payment volumes.

By diversifying the merchant portfolio into industries including financial services, e-commerce, and bill payments, India’s TPVs increased by 65% to $43.8 billion, making up for the reduced volume in the COVID-19-affected categories.

PayU India runs three divisions: credit solutions for individuals and small enterprises, domestic and international payments, and strategic investments in fintech firms.

Launched in December 2021, PayU India’s LazyCard credit-linked Visa card programme had total loan disbursements of $586 million through March 2022.

The deal announced in August 2021 is the largest fintech combination approved by the CCI till date.