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Distributed e-commerce market platform provider Infibeam will soon offer digital payment gateway services as the company has entered into an agreement with 15-year-old digital payment player CCAvenue for a merger into the former.
Infibeam signed an agreement with Avenues India Private Limited (which runs CCAvenue) to invest ₹150 crore to acquire 7.5 per cent stake, in addition to the existing 3.85 per cent, which the former had picked up in June 2016 for around ₹50 crore through Infibeam subsidiary NSI Infinium Global Pvt Ltd.
Infibeam’s latest investment is funded partly through internal accruals and equity debt. After the stake buy, the board of directors of Infibeam has given its nod for subsequent amalgamation of CCAvenue into Infibeam by issuance of fresh shares, subject to due diligence and regulatory approvals.
“In June last year, we did a strategic investment in CCAvenue. We will integrate payment as part of our existing framework of build-a-bazaar, which is a distributed market place. As a result, we will meet the merchant requirement of a payment gateway,” Vishal Mehta, founder and CEO, Infibeam, told BusinessLine after the announcement.
“The entire company, CCAvenue, is being merged into Infibeam. Post the merger and the subsequent regulatory approvals, the promoters of CCAvenue will get the shares of Infibeam,” Mehta said.
The latest investment by Infibeam puts CCAvenue’s valuation at ₹2,000 crore.
CCAvenue has over 1 lakh merchants with annual transactions exceeding ₹15,000 crore.
Infibeam had more than 66,000 merchants on its e-commerce platform at the end of December 2016. Set up in 2002, CCAvenue offers a multi-channel payment platform with tie-ups with more than 48 banks.
It will soon also have the Bharat Bill Payments Systems which will facilitate all bill payments for utilities and services.
“Culturally, we align very well. They are a highly profitable company like Infibeam. This is a synergistic opportunity to be able to align our platform to merchants and vice-versa,” Mehta said.
For the third quarter ended December 31, 2016, Infibeam posted a net profit of ₹12.8 crore, significantly up over 2,400 per cent from ₹50 lakh in the corresponding quarter a year ago.
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