In India’s largest fintech acquisition deal, digital payments gateway provider PayU has acquired a controlling stake in Nexus Venture Partners-backed fintech start-up PaySense at a valuation of $185 million. As part of the transaction, PayU will merge it with its credit business LazyPay to build a full-stack digital lending platform in the country.
Naspers-backed PayU will also pump in $200 million in the new enterprise in the form of equity capital of which $65 million will be immediately invested, while the rest will be infused in the next two years.
"This merger is the next step in our journey as we accelerate our vision for credit in India as we integrate this fast-growing business and build a full-stack digital lending platform aligned with PayU’s overall plan of orchestrating a broader fintech ecosystem in the region,” said Siddhartha Jajodia, Global Head of Credit, PayU. The digital payments company had pared its losses by around 28 per cent at Rs 119 crore in the financial year ending March, 2019. This is PayU’s second India acquisition. It had bought Citrus Pay for $130 million in 2016.
As part of the deal, PaySense founder Prashanth Ranganathan will lead PayU’s credit business in India as the CEO of the new entity. He will continue to retain a stake in the merged enterprise while all the other investors and shareholders will exit.
“PayU is a natural partner for us as we both strive to make finance more simple, accessible and transparent. We’re excited to start bringing our personal loan product to more consumers throughout India and truly democratise credit,” said Ranganathan.
PaySense, which provides instant loan of up to Rs 5 lakh has over five million registered customers with loan disbursement of over Rs 1,100 crore.
From January 2013 to October 2018, approximately 2,000 fintech companies have been founded, turning India into a hotbed of entrepreneurial activity, says a PwC study. As more customers in India get used to the idea of shopping and transacting online, a large portion of them will also begin seeking credit digitally. Accordingly, a Boston Consulting Group estimates that because of these developments, India’s digital lending market will become a $1 trillion opportunity in the next five years. Several fintech startups such as Capital Float, LendingKart and NeoGrowth are changing the way consumer secures loans.