Prosus NV (PRX.AS) increased its investment in India with a $4.7 billion transaction for payments platform BillDesk on Tuesday, making it one of the country’s fastest-growing fintech businesses.BillDesk will complement Prosus’ existing PayU business, which operates in India, Latin America, and Europe, according to Prosus, Europe’s equivalent to SoftBank (9984.T) and its Vision Fund. Prosus, located in the Netherlands, has long been interested in India, but the BillDesk acquisition is the company’s largest investment there to far.
“This is really a transformative transaction for PayU and its position as one of the leading payment and fintech providers in India and actually in the world,” On a conference call with the media, Prosus CEO Bob van Dijk said.
By 1448 GMT, Prosus’ stock had risen 5.1 percent to 73.96 euros. Prosus is a consumer internet company that was split out of Naspers (NPNJn.J) of South Africa in 2019. It owns investments in online marketplaces, educational software, food delivery, and finance.
Prosus is betting that its long-term investments can fill a huge valuation gap and give it the same name recognition as one of the world’s most aggressive technology investors. It is best known for its 28.9% position in Tencent(0700.HK) of China. The payments industry’s rapid expansion has been aided by increased demand during the pandemic. In the financial year ending March 31, 2021, PayU processed $55 billion in payments, up 51% over the prior year. In the same time period, BillDesk processed $92 billion in payments. For the fiscal year ended March 31, 2021, it produced a net profit of 2.71 billion Indian rupees ($37.05 million), implying a purchase price of more than 100 times earnings.
PayU CEO Laurent le Moal defended the price, claiming that it is reasonable considering BillDesk’s quick growth, leading position, existing profit margins, and the combined firms’ potential to explore adjacent areas.
“The price paid seems quite hefty at about 20 times revenues but there should be significant synergies in combining the two businesses, as well as very high growth to come, given the attractiveness of the Indian payment market, “In a note, ING analyst Marc Hesselink stated.
The acquisition of BillDesk, which was launched in 2000, is subject to regulatory approvals, notably that of India’s Competition Commission. The acquisition on Tuesday brought Prosus’ total investment in the Indian market to more than $10 billion, according to the company. PJT Partners in the United States and Avendus in India advised Prosus. Morgan Stanley provided BillDesk with advice.