Prosus terminates $4.7 bn deal to acquire BillDesk

• Prosus, the company behind PayU has terminated a $4.7 billion deal to acquire BillDesk.
• The company has said that certain conditions precedent were not met by the deadline at the end of September.
• Prosus had announced the deal in August last year.

Prosus NV, which owns PayU, has terminated a $4.7 billion (about Rs 38,400 crore) deal to acquire Indian payments firm BillDesk after conditions on the deal weren't met.

In a statement, Prosus said certain conditions precedent weren't met by the deadline at the end of September.

Approval of the Competition Commission of India (CCI), which was one of the conditions precedent, was received on September 5 but Prosus did not specify which other conditions were not met.

A condition precedent is a stipulation that defines certain conditions that must either occur or be met by either party to ensure progress or execution of a contract.

The amalgamation of BillDesk with PayU of Prosus would have created a digital payments giant with an annual total payment volume (TPV) of $147 billion.

Its closest rivals in India such as Razorpay and CCAvenue, which is owned by Infibeam, are estimated to have an annual TPV of over $50 billion and $18-20 billion, respectively.

This would have been the largest acquisition of Prosus, a Dutch e-commerce company.

Prosus had on August 31 last year announced the acquisition of BillDesk in an all-cash deal to expand its footprint in India's booming fintech sector under the umbrella of its payment gateway PayU.

There is no break-free associated with the deal.

Prosus, majority owned by Naspers, serves more than 4,50,000 merchants with over 100 payment methods. Prosus has been a long term investor and operator in India investing close to $6 billion in technology companies like Swiggy, and Pharmeasy since 2005, it said.

BillDesk, founded by three consultants from Arthur Andersen LLP - MN Srinivasu, Ajay Kaushal and Karthik Ganapathy - in 2000, benefited from a surge in growth in digital payments as smartphones adoption grew and Internet access became ubiquitous. The founders would have collected $500 million each from the deal.

"Closing of the transaction was subject to the fulfilment of various conditions precedent, including approval of the CCI," Prosus said in a statement.

While CCI approval was secured on September 5, 2022, "certain conditions precedent were not fulfilled by September 30, 2022 long stop date and the agreement has terminated automatically in accordance with its terms and, accordingly, the proposed transaction will not be implemented," it said.

It remains committed to the Indian market and growing its existing business within the region, Prosus statement added.

Launched when the term fintech didn't even exist, BillDesk - which counts private equity firm General Atlantic as its single-largest shareholder with a holding of about 14.2 per cent - is said to have the largest roster of business clients among payment gateways in India.

It provides solutions ranging from settlements, collections, reconciliations, and auto settlements. It also partners with companies in categories such as billing, utility payments, direct-to-consumer procurement, government payments, financial services, and telecom.

TA Associates held a 13.1 per cent stake while Visa had 12.6 per cent in the firm. The three founders had close to 30 per cent shareholding.

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