Nasper-backed PayU in talks to acquire BillDesk for up to $4 billion

Nasper-backed fintech firm PayU has started talks to acquire domestic payment gateway major BillDesk, and the deal size could be in the range of $3-4 billion, sources in the know said.

“BillDesk has been open to being acquired for some time now, but in the past the valuations that the company was seeking proved to be a hurdle,” said a source. “Three years ago too, PayU had approached BillDesk for an acquisition, but things didn’t go ahead due to high valuations. BillDesk had asked for $2-billion value then,” said the source.

“If the deal happens, it will be a shot in the arm for PayU, which will be able to capture the entire end-to-end payments ecosystem,” said a partner at a venture capital fund with investments in several fintech start-ups.

Messages sent to PayU did not elicit any response, while BillDesk could not be reached.

Media reports have said Paytm, which will soon come up with its initial public offering (IPO), is also evaluating BillDesk.

“Billdesk is a very profitable and well-managed company. Its foray in the government segment is the strongest, and has an enviable technology back-end. Whoever acquires it will be surely getting access to good business,” said another source from the fintech industry.

“The Paytm IPO is creating momentum in the fintech space and several M&As (mergers and acquisitions) are likely to happen in the coming few months,” said Mahesh Singhi, founder & MD, Singhi Advisors.

BillDesk was founded in 2000 by a team of ex-Arthur Anderson professionals -- M N Srinivasu, Ajay Kaushal and Karthik Ganapathy. Reports say it handles 50-60 per cent of billing transactions in India.

 According to the company’s website, BillDesk’s investors include TA Associates, Clearstone Ventures, General Atlantic, and Temasek. It also says BillDesk is India’s largest institution, and its technology, payments services and its extensive processing network are used by India’s largest banks and many of India’s organizations across diverse industry segments such as telecom, insurance, utilities, financial services, education, entertainment and e-commerce businesses. The BillDesk platform processes a majority share of the online and mobile payments transactions that are conducted through aggregator platforms in India.

The integration of payment gateway has become one of the most critical aspects of every industry. It allows collecting money through the customer's preferred bank without compromising sensitive data. The Indian payment gateway market is expected to register a compound annual growth rate of 15 per cent over 2020-2025, according to a report by ResearchandMarkets.com.