The Competition Commission of India (CCI) has given its nod for the $4.7 billion acquisition of online payment gateway provider BillDesk by Prosus-backed PayU India. This is the largest combination ever approved by the competition watchdog in the fintech space. 

This acquisition, which was announced in August last year, will see PayU, the payments and fintech business of Prosus operating in more than 20 markets, becoming a leading online payment providers globally by payment volume. This deal will also take Prosus investments in India to over $10 billion.

“Commission approves acquisition of 100 per cent of the equity share capital of (BillDesk) by PayU Payments”, the CCI tweeted on Monday evening. 

The combination approved by CCI related to the acquisition of 100 per cent of equity share capital of Limited  (IIL), which is an unlisted company that uses the name “BillDesk” as its trading/business/brand name in India, by PayU Payments Private Ltd (PayU India). 

The shares of PayU India are indirectly held by Prosus N.V (Prosus), which is Euronext Amsterdam listed global consumer internet group and one of the leading technology investors in the world.

IIL primarily provides payment aggregation services that enables merchants (and other entities) to receive payments from their customers across various digital payment methods. 

BillDesk was founded in 2000 by M N Srinivasu, Ajay Kaushal and Karthik Ganapathy and was backed by investors. including Clearstone, Visa and Temasek. 

For Prosus, India remains its main investment destination, and has classifieds, food delivery and education technology besides payments and fintech as its core segments. 

Besides payments and financial services, Prosus had among others invested in ed-tech leader Byju’s, food-delivery platform Swiggy and home-services company Urban Company.

CCI scrutiny

This BillDesk deal is significant as it is one among the few ones where CCI had issued a show cause notice on a combination. 

CCI had in July-end sent a 30-page notice contending that the combination is likely to cause an Appreciable Adverse Effect on Competition (AAEC), and sought an explanation from PayU as to why a phase-II investigation (thorough investigation) should not be launched on the deal. 

The competition watchdog had last Friday held an oral hearing of the parties concerned on the reply given by them to the notice. 

Biz performance

In 2021-22, PayU India’s revenues grew 48 per cent to $304 million, led by a growth in total payment volumes.

TPVs in India grew by 65 per cent to $43.8 billion and the growth was driven by diversification of the merchant portfolio into segments such as financial services, e-commerce and bill payments, compensating the r lower volumes from categories impacted by Covid-19.

PayU India operates across three businesses—payments for domestic and across border transactions, credit solutions for consumers and small businesses and strategic investments in fintech companies. 

PayU India’s credit-linked Visa card offering LazyCard was launched in December 2021 and recorded total loan disbursals of $586 million till March 2022.