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Prosus, the investment arm of South Africa’s Naspers internet group, has agreed to buy India’s BillDesk for $4.7bn and merge it with its own PayU payments business, in one of the biggest deals ever in the country’s fast-growing digital payments sector.
The all-cash acquisition of BillDesk, India’s oldest payment gateway, will create one of the world’s biggest online payment providers with $147bn in annual total payment volume, the companies said on Tuesday.
Amsterdam-listed Prosus has focused on India to expand an international internet empire that includes food delivery and classified advertising, but it particularly expected the global shift from cash to online payments to provide a significant part of its future growth.
BillDesk is “really the very definition of an Indian success story . . . the combination [with PayU] will be a leading digital payments company locally and globally,” said Bob van Dijk, chief executive of Naspers and Prosus. The acquisition is subject to regulatory approvals.
Among other Indian investments Prosus owns a stake in Swiggy, the country’s biggest food delivery company, which raised $1.25bn from investors last month. The size of the BillDesk acquisition compares to the $6bn that Naspers and Prosus have invested in India’s payments sector since 2005.
India “will be a significant driver of our growth in the next decade as well . . . India remains our number one investment destination,” van Dijk said.
The number of digital retail payments in India has increased four-fifths since 2018-19 to 44bn in 2020-21, according to the Reserve Bank of India. PayU’s share of these transactions will rise fourfold to 4bn by merging with BillDesk, the companies said.
Mumbai-based BillDesk, which was founded in 2000, has a big share in billing and processing payments for government portals. It recently joined a bank-led consortium that is bidding for the licence to establish a new retail payments infrastructure in India.
“This investment by Prosus validates the significant opportunity in India for digital payments that is being propelled by innovation and the progressive regulatory framework put into place by the Reserve Bank of India,” said M N Srinivasu, BillDesk’s co-founder.
Prosus is best known for its almost-29 per cent stake in Chinese internet group Tencent, which dominates the market value of the company and its South African parent, leading their share prices to discount their other investments.
Naspers listed Prosus in 2019 to house its international investments and tackle the discount, but the Tencent stake remains so outsized that Naspers dominates the Johannesburg stock market, forcing investors to limit their exposure.
Naspers and Prosus have gradually trimmed the Tencent stake over the years to build a multibillion-dollar war chest for acquisitions. The companies also completed a share swap this month to cut Naspers’ outright shareholding in Prosus, and therefore reduce its local market weighting.
Prosus now owns 49 per cent of Naspers, and Naspers just over 56 per cent of the investment vehicle. Investors have balked at the complexity of the cross-shareholding structure.
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