CCI nod to PayU’s $4.7 billion acquisition of BillDesk

After about a year of delay, the Competition Commission of India (CCI) has finally approved the acquisition of payment gateway BillDesk by Naspers' PayU for $4.7 billion. The deal is touted to be the second largest internet deal after the acquisition of Flipkart by the U.S. retail behemoth Walmart Inc.

The CCI has approved the acquisition of 100% of the equity share capital of IndiaIdeas.com Limited (IIL), known as BillDesk, by PayU Payments Private Limited, the CCI says in a tweet.

The acquisition, approved under Section 31(1) of the Competition Act, 2002, reportedly came after the competition watchdog approached the competitors of PayU and BillDesk to seek their views on the acquisition deal.

The deal is yet to be approved by the Reserve Bank of India (RBI). BillDesk and PayU compete with other fintech players like Paytm, Pine Labs, Razorpay, Infibeam Avenues and MSwipe in the country.

PayU India and BillDesk run complementary businesses within India’s digital payment industry. Together, the two expect to create a financial ecosystem handling 4 billion transactions annually, which is about four times PayU’s current level in India.

Founded in 2014, PayU India provides payment aggregation services that enable merchants (and other entities) to receive payments from their customers across various digital payment methods. Shares of PayU India are indirectly held by Prosus N.V. (“Prosus”), a global consumer internet group and one of the leading technology investors in the world.

Prosus has a primary listing on Euronext Amsterdam. Naspers Limited, listed on the Johannesburg Stock Exchange, holds 73.6% voting rights in Prosus. The proposed acquisition will see PayU become one of the leading online payment providers globally by total payment volume (TPV).

IIL, which is an unlisted public limited company, uses the name “BillDesk” as its brand name in India. IIL also provides payment aggregation services that enable merchants (and other entities) to receive payments from customers across various digital payment methods. Founded in 2000 by MN Srinivasu, Ajay Kaushal and Karthik Ganapathy, BillDesk has now emerged as one of the largest bill payment ecosystems in the country.

BillDesk's net profit for 2020-21 stood at ₹270 crore, up from ₹231 crore reported a year before. The company's total assets stand at ₹932 crore as of March 31, 2021. The existing shareholders of the company had entered into a share purchase agreement with PayU Payments for the proposed sale of 100% of the issued and paid-up share capital, on August 31, 2021.

The digital payments industry is thriving in India. According to the RBI, payment systems recorded a robust growth of 63.6% in terms of volume during 2021-22, on top of the expansion of 26.7% in the previous year. In value terms, the growth was 23.1% against a decline of 13.4% in the previous year, mainly due to robust growth observed in the large value payment system -- RTGS. The share of digital transactions in the total volume of non-cash retail payments increased to 99.3% during 2021-22, up from 98.8% in the previous year.