Prosus NV (OTCMKTS: PROSF) is increasing its investment in India after it announced a $4.7 billion deal for BillDesk. The deal for the payment platform makes Prosus one of the largest players in India’s burgeoning fintech industry.
Prosus to acquired BillDesk
The Netherlands-based Prosus has been keen on the fintech sector in India, but the acquisition of BillDesk is so far its largest investment. Prosus said that BillDesk would supplement operations of its PayU business currently available in Europe, Latin America, and India.
The company’s CEO, Bob van Dijk said, “This is really a transformative transaction for PayU and its position as one of the leading payment and fintech providers in India and actually in the world.”
Prosus was spun off from South Africa’s Naspers Limited (OTCMKTS: NPSNY) in 2019. It currently owns stakes in several consumer internet firms in educational software, fintech, food delivery, and online marketplace. In addition, the company owns 28.9% interest in China’s Tencent, and it is so betting that the long-term investments will fill a wide valuation gap. As a result, this will give Prosus a name acknowledgment as a leading aggressive tech investor in the world.
The pandemic has helped the growth of the payments sector globally. In the year ended March 31, 2021, PayU processed around $55 billion payments, a 51% YoY increase. BillDesk, on the other hand, processed payments worth $92 billion over the same period. The payments platform generated a net profit of $37.05 million for the year ending March 31, 2021, indicating that the acquisition price is almost 100X earnings.
BillDesk’s valuation is justified given its profit margins and leadership position
PayU CEO Laurent le Moal, the PayU CEO, defended the valuation stating that it is justifiable considering the rapid growth experienced in BillDesk’s market, its profit margins, leadership position, and potential for merged companies to foray into the sector. However, the deal is subject to meeting customary conditions and regulatory approvals.