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PayU buys PaySense for an equity valuation of $185 million

, ET Bureau|
Last Updated: Jan 11, 2020, 11.32 AM IST
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This planned merger is aligned with PayU’s long term vision of orchestrating a fintech ecosystem in India by partnering with the right companies and offering multiple financial services.

Highlights

  • As a part of the deal, Prashanth Ranganathan, the founder and CEO of PaySense will lead PayU’s credit business in India.
  • PaySense’s management team of technology and fintech experts will also become part of the PayU’s credit team, adding value to the combined business.
  • PayU’s unified digital credit platform will enable third parties such as banks, NBFCs and alternate lenders to co-lend and grow assets and will also enable borrowers to access credit when and where they need it.
In an all cash deal, PayU, one of the leading payment and fintech company in India has decided to acquire significant majority equity stake in PaySense, one of the fastest growing digital credit platform for an equity value of $185 million.

Siddhartha Jajodia, Global Head of Credit, PayU said that, “The two stage transaction involved PayU buying out all the existing financial and angel investors of PaySense. It merge its lending business Lazypay with it (PaySense) and will also infuse $200 million in PaySense in the next 24 months that includes $65 million immediately, taking the deal size to over $300 million or more than Rs 2,100 crore.”

“The company plans to merge their business operations to build a full-stack digital lending platform in India,” Jajodia said.

On the complete consummation of the deal over the next 24 months, PayU will have about 80% stake in the merged entity. Currently, PayU owns about 20% stake in PaySense. As a part of the deal, Prashanth Ranganathan, the founder and CEO of PaySense will lead PayU’s credit business in India as the CEO of the new enterprise. He will continue to retain a stake in the merged enterprise.

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PaySense’s management team of technology and fintech experts will also become part of the PayU’s credit team, adding value to the combined business. All the three leading PE firms –Nexus Ventures Partners, Jungle Venture and Rocketship and angel investors have decided to exit from the company.

This planned merger is aligned with PayU’s long term vision of orchestrating a fintech ecosystem in India by partnering with the right companies and offering multiple financial services. The combination will bring together two complementary companies in the alternative lending space

PayU’s understanding of consumer backgrounds and insights into their purchase behaviour and affluence levels from its payment gateway business, and LazyPay’s deep experience in driving customer acquisition and engagement combined with PaySense’s strong analytics, tech & risk management capabilities will enable the combined entity to serve more of the new-to-credit Indian population.

While India’s banked population has more than doubled since 2011 to over 80%, credit bureau coverage is still limited. BCG research shows that India’s digital lending market represents a $1 trillion opportunity over the next five years.

PayU’s unified digital credit platform will enable third parties such as banks, NBFCs and alternate lenders to co-lend and grow assets and will also enable borrowers to access credit when and where they need it in a digital and seamless way. The joint team will combine its complementary assets, capabilities and talented teams with the goal of making access to credit quick, seamless and widely available for the underserved in India and drive higher customer satisfaction.

Siddhartha Jajodia, Global Head of Credit, PayU commented, “Technology has the power to completely transform people’s access to financial services and the credit market in India is ripe for further digital disruption. This merger is the next step in our journey as we accelerate our vision for credit in India.

Speaking on the occasion, Prashanth Ranganathan said that, “Providing more Indian consumers with access to credit is crucial to helping individuals grow and succeed. PayU is a natural partner for us as we both strive to make finance more simple, accessible and transparent.

Sayali Karanjkar, Co-founder, PaySense said, “We continue to witness the massively untapped market potential for short-term collateral-free loans among the digitally savvy aspirational youth. Both PayU and PaySense believe in leveraging the enormous potential of technology to unlock credit and financial services for vastly underserved consumers in India and this merger reflects our allied vision of delivering financial freedom to all."

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PayU in talks to buy consumer lending platform PaySense

PaySense starts operation in Gujarat

PaySense raises $18 million from PayU and others

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