Fintech firm PayU India to invest $120 mn by end of FY26, say senior exec

Fintech company PayU India will invest $100-$120 million in its credit business alongside putting money in its payments vertical in FY26, said its group chief financial officer Arvind Agarwal.

 

The amount will be raised through existing resources, including internal accruals, debt, and further equity, according to the Prosus-backed company. The Dutch investor has infused $35 million (around Rs 300 crore) out of the total budgeted investment in the first quarter of FY26.

 

The credit business is expected to get an investment of $50-$60 million. PayU is considering another $60-$70 million infusion in payments infrastructure firm Mindgate Solutions, in which it acquired a 43.5 per cent stake in March.

 

“There’s no capital requirement for loss-funding, but we do require some capital for growth. Last year, in FY25, Prosus invested almost $200 million in PayU,” Agarwal told ‘Business Standard’.

 

Out of the $200 million it raised in FY25, PayU invested $100 million in its credit business. The remaining amount was allocated to inorganic initiatives, like the Mindgate investment, along with some organic capital infusion.

 

“...the payments business on a standalone basis itself generates $25 million in ebitda, so it doesn’t require any capital unless we want to go inorganic. We are also making investments into artificial intelligence and technology but that is self-funded from the payments (vertical’s) profit,” he said.

 

Agarwal expected the company to become ebitda positive in FY26, referring to earnings before interest, taxes, depreciation, and amortisation.

 

“The payment [business] has been profitable at the ebitda level for the last three years, and credit will become profitable on an ebitda basis in the coming quarter: Q2 of FY26. In Q2, it should break even on an ebitda basis. As a result of that, PayU India as a whole will become ebitda positive in FY26.”

 

Prosus’s annual report last month said PayU’s payments business recorded a revenue growth of 12 per cent to $498 million in FY25. PayU Finance, the group’s credit unit, saw its revenue grow to $171 million, taking the group’s consolidated revenue for the year to $669 million.

 

The Dutch investor’s report added that PayU India had reorganised its payments business to boost customer acquisition and partnerships.

 

“Instead of the earlier structure, which was built around enterprise or government-only channels; it was more like a product-line organisation. We thought the right structure for our company is farming and hunting,” said Agarwal.

 

By reorganisation, Agarwal referred to a dual approach: “farming”, which focuses on existing merchants by deepening the penetration of value-added services (VaS) and software-as-a-service (SaaS) products; and “hunting” for new customers.

 

VaS includes services such as affordability, loan payments, and checkout finance. The SaaS business includes categories such as fraud risk management and authentication.

 

“Now, we will start consolidating Mindgate's numbers from FY26. VAS and SaaS should be one-third of payments. It's a higher-profitability business. Of the total PayU revenue, it will be almost one-fourth,” he said.

 

PayU India in May received final approval from the Reserve Bank of India (RBI) to operate as an online payment aggregator; that was a year after securing in-principle approval. In January 2023, the RBI had asked the company to reapply for a payment aggregator licence. One of the reasons cited was the company’s complex corporate structure.

 

“There was an embargo for 15 months. Obviously, we need to get back our speed in bringing on more and more new customers,” he said.

 

PayU has more than 500,000 customers and it adds about 2,000 new ones every month.