Prosus to pay $4.7B for BillDesk


Prosus Ventures is set to buy BillDesk, one of India’s oldest digital payment firms, for a cool $4.7 billion in what will be one of the biggest acquisitions ever in the sector. Meanwhile, other tech giants including Facebook and Xiaomi have their eyes on India’s huge — and hugely risky — loan market.

Also in this letter:

  • OTO Capital raises $6 million in Series A
  • Govt reviewing comments on draft e-comm rules
  • Nigeria to launch its own digital currency

Prosus to buy BillDesk for $4.7 billion

digital transactions

Prosus Ventures said earlier today that it would acquire Indian payments gateway firm BillDesk for $4.7 billion to boost its fintech business PayU.

Context: When the deal goes through, it will be one of the biggest acquisitions in India’s digital payments space. It comes at a time when the digital payments ecosystem is seeing huge traction, with many Indians taking to online payment modes for the first time.

The acquisition also comes just ahead of the Reserve Bank of India’s upcoming regulatory regime for payment aggregators and payment gateways. The new rules are expected to tighten regulatory supervision of payment system intermediaries.

BillDesk

After the acquisition, the combined entity will emerge as the leading online payments providers globally and in India by total payment volume (TPV), Prosus said in a statement.

PayU

Srinivasu of BillDesk said the investment by Prosus “validates the significant opportunity in India for digital payments which is being propelled by innovation and the progressive regulatory framework put into place by the Reserve Bank of India”.

Bob van Dijk, group CEO of Prosus, said, “We have a long and deep relationship with India, having supported and partnered with some of its most dynamic entrepreneurs and new tech businesses since 2005. We’ve invested close to $6 billion in Indian tech to date, and this deal will see that increase to more than $10 billion.”

Success story: Founded in 2000 by three former Arthur Andersen executives — M N Srinivasu, Ajay Kaushal and Karthik Ganapathy — BillDesk is one of the very few profitable internet companies in India.

It competes with the likes of PayU, CCAvenue and a clutch of younger startups such as Razorpay. The company has the largest roster of business clients of any payment gateway in India and handles 50-60% of billing transactions.

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Tech giants want a slice of India’s huge loan market

FILE PHOTO: A 3D-printed Facebook logo is seen placed on a keyboard in this illustration

Prosus isn’t the only tech giant looking for a foothold in India’s fintech sector. The country’s digital loan market is fast becoming a battleground for firms such as Facebook and Xiaomi, reports Bloomberg.

India’s digital lending market is expected to hit $350 billion by 2023 and reach $1 trillion by 2024, according to estimates from the Boston Consulting Group.

What’s happening? Facebook said earlier this month that it will first roll out its small business loan programme in India. Through this programme, Facebook will offer loans via a partner to firms that advertise on its platform. The loans will range from Rs 5 lakh to Rs 50 lakh with interest rates of 17%-20%, potentially without collateral.

Why the interest? “The payment business hardly makes any money, but lending makes a lot of money,” said Saurabh Tripathi, managing director and senior partner at BCG’s financial institutions practice. “Indian consumers are waiting for more appropriately designed digital experiences and many players are jumping at this opportunity.”

Yes, but: India’s loan market has huge potential but also huge risks. The country’s bad loan ratio is expected to rise to 11.3% by March 2021, making it the worst performer among major countries for the second year in a row.


Two-wheeler financing startup OTO Capital raises $6 million

Sumit and Harsh

Sumit Chhazed (right) and Harsh Saruparia, cofounders, OTO

OTO Capital, a startup that helps customers buy or lease two-wheelers, has raised $6 million in a Series A investment round led by Matrix Partners India.

The round also involved existing and new investors such as Prime Venture Partners, 9Unicorns and Better Capital, and angel investors such as Asish Mohapatra of OfBusiness, Ramakant Sharma of Livspace, Kunal Shah of Cred, K Ganesh of BigBasket, and Ashneer Grover and Suhail Sameer of BharatPe.

The company will use the funds to increase its user base, hire talent, and scale up its tech platform. “With this investment, the company plans to launch its financing-cum-commerce platform in 15 new cities, including Delhi, Nashik, Indore and Vijaywada,” the company said.

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Founded in 2018 by Sumit Chhazed and Harsh Saruparia, OTO operates in Chennai, Bengaluru, Pune, Hyderabad and Mysore. The company claims it has grown 4x in the past 12 months, while keeping non-performing assets below 1%. “More than 30% of the company’s transactions were sourced and completed digitally,” it said in a press statement.

Business model: Using OTO’s platform, a buyer pays some money upfront, like with any other loan, but gets up to 30% lower monthly installments and the option to retain, return or upgrade the vehicle when the lease ends. The company has partnered with various banks and non-banking financial companies (NBFC) to provide financing options to its customers. It said various banks and NBFCs have committed Rs 250 crore in loans for the next 12 months. It also provides full auto lifecycle management, from credit underwriting to insurance, maintenance, and eventual resale of the vehicle.

Also Read: Sparks Studio gets $125,000 funding from Y Combinator

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Govt looking into public comments on draft e-commerce rules

ecommerce policy

The consumer affairs ministry is examining stakeholders’ views on provisions of the draft e-commerce rules, including the definition of ‘related party’, a senior ministry official said today.

Catch up quick: On June 21, the government had proposed changes to India’s ecommerce rules and sought public comments by July 6. It later extended this deadline to July 21.

The proposals called for a ban on fraudulent flash sales and mis-selling, and for e-commerce firms to appoint chief compliance officers and grievance redressal officers, as social media platforms are required to do under the new IT rules.

What was said:
“We have received the comments. They are still under examination,” additional secretary in the consumer affairs ministry Nidhi Khare told PTI. She added that all provisions, including definition of ‘related party’ would be examined before the rules were finalised, but did not say when they would be.

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Khare, who is also the chief commissioner of Central Consumer Protection Authority (CCPA), had said in a press conference in June that the ministry “will not regulate” trade on ecommerce platforms and that etailers need not be anxious about the proposed changes.

But ecommerce firms and legal experts have said the government needs to hold wider consultations before framing the e-commerce rules as they encroach on various other laws in their current form.


Nigeria to launch its own digital currency

CRYPTO

The government of Nigeria will work with Bitt in its bid to launch its own digital currency, the eNaira, the country’s Central Bank said today.

Back story: The Central Bank barred banks and financial institutions from dealing in or facilitating transactions in cryptocurrencies in February and announced plans to launch its own digital currency later this year.

Central Bank Governor Godwin Emefiele has said the eNaira would operate as a wallet against which customers could hold existing funds in their bank accounts. He said the eNaira would accelerate financial inclusion and enable cheaper and faster remittance inflows.

Earlier this year, Barbados-based Bitt led the development of the Eastern Caribbean Currency Union’s ‘DCash’, the first digital cash issued by a currency union central bank.

Scepticism in El Salvador: Meanwhile, less than a week before Bitcoin is set to become legal currency in El Salvador, some business owners were sceptical about the launch, citing a lack of public information, news agency EFE reported. On Monday, El Salvador will become the first country in the world to adopt Bitcoin as legal tender. It will circulate alongside the US dollar, the country’s official currency.

First crypto ATM: The first cryptocurrency ATM opened in Honduras last week as Bitcoin backers sought to spur demand for virtual assets after neighbouring El Salvador became the first country to establish Bitcoin as legal tender. The machine, dubbed “la bitcoinera” allows users to acquire Bitcoin and Ethereum using the local lempira currency.

Today’s ETtech Top 5 newsletter was written by Zaheer Merchant in Mumbai. Graphics and illustrations by Rahul Awasthi.





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