Prosus takes on global payments giants with R68bn Billdesk purchase

Shares in Naspers subsidiary Prosus shot up more than 5% in trade on Tuesday as the group announced a deal to take over India’s BillDesk in its largest acquisition yet, creating a top global payments unit and doubling down on its investment in the Asian country. 

After almost two years of searching for a deal that would cement its place as a top 10 global technology investor — alongside Facebook, Google, Amazon, Apple and others — Prosus said it has acquired Indian digital payments provider BillDesk for $4.7bn (R68bn). 

Founded in 2000 by MN Srinivasu, Ajay Kaushal and Karthik Ganapathy, BillDesk is a payments provider based in Mumbai, India. The company, whose previous investors include payments giant Visa, was first valued at more than $1bn in 2015.

Laurent Le Moal, CEO of PayU, which houses Prosus’s fintech businesses, told Business Day the acquisition creates a digital payments company that can compete with the biggest international players.  

“At the global scale, with this combination, we’re creating a top 10 online payments company,” Le Moal said.  

When asked if his team has considered any other acquisition targets, Le Moal said it has not. “This is the best partner for us. We’ve known the company and its founders for years,” he said.

In recent months, Prosus shares have suffered in the market — with its parent, Naspers — due to a technology crackdown by Chinese authorities. The stock is down almost a third this year.

News of the BillDesk deal sent shares soaring on Tuesday, recovering some of the lost ground. The stock closed 5.27% firmer at R1,267. 

Complementary businesses

According to the Reserve Bank of India (RBI), the number of transactions for digital retail payments has grown more than 80% from 24-billion in 2018 and 2019 to 44-billion between 2020 and 2021. In the next three years, RBI estimates that more than 200-million new users will adopt digital payments.

PayU says its India unit and BillDesk run complementary businesses in that country’s digital payment industry. Together, PayU expects to create a financial ecosystem handling 4-billion transactions annually — four times its current level in India. 

Combined, the companies will handle a total payment volume of $147bn. 

Like fellow tech player Apple, Prosus — whose business is primarily in classifieds, food delivery and fintech — seems to have realised the growth potential and value of being in the nation that now has a population of more than 1-billion. 

Bob van Dijk, group CEO of Prosus, said it has a “long and deep relationship with India, having supported and partnered with some of its most dynamic entrepreneurs and new tech businesses since 2005”.

The group has invested almost $6bn in Indian tech companies to date, and this deal will see that increase to more than $10bn, he said.

Separately, the group said it has entered into an agreement to buy an additional 2.5% stake in Delivery Hero, a deal that will cement its status as the largest shareholder in the German food delivery firm with just more than 27%.  

The group did not say how much this additional stake is worth. 

Cash pile

Prosus has a large cash pile, raked in through the reduction of its $200bn stake in Tencent. The latest share sale, which netted the company almost $15bn, came in April 2021, giving the it enough mergers & acquisitions budget to compete in the e-commerce industry dominated by deep-pocketed Silicon Valley giants. 

Until this week Prosus’s largest deal had been in an edtech company. Earlier in June, Prosus said it would acquire Stack Overflow, a knowledge-sharing platform for developers and technologists, for $1.8bn (almost R25bn).

gavazam@businesslive.co.za