Prosus walks away from $4.7bn deal with India’s BillDesk

Naspers-owned technology firm Prosus has terminated its agreement to acquire Indian digital payments provider BillDesk for $4.7-billion (about R85-billion).

In a brief statement, the Dutch-based technology investor, which is majority owned by Naspers, said it had cancelled the deal with BillDesk after failure to fulfil various conditions, despite approval earlier last month by India’s Competition Commission. There was no break fee associated with the deal.

On 31 August 2021, Naspers announced an agreement had been reached between PayU Payments Private Limited (PayU) — a Prosus subsidiary — and shareholders of BillDesk, a payments gateway. The all-cash deal would have enabled Prosus to expand its footprint in India’s booming fintech sector.

The Economic Times of India pegged the deal as the second-largest M&A in India after the Walmart-Flipkart deal in 2018. It reported that the merger would have created a payment gateway giant that would process $147-billion in annualised total payments value (TPV) — more than twice that of its nearest contender, Razorpay, which processes $80-billion in annual TPV. Prosus has invested about $6-billion in India’s technology startups since 2005, the business daily reported.

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Head of investor relations at Prosus, Eoin Ryan, explained in a brief note that “certain conditions precedent were not fulfilled by the 30 September 2022 long-stop date”, causing the agreement to be automatically terminated. No further information was available and the company did not elaborate.

Bloomberg reports that since the deal was announced last year, the “market for payments companies in India had weakened, and Prosus didn’t want to proceed after BillDesk missed the deadline, a person familiar with the matter said”.

BillDesk was founded by three consultants from Arthur Andersen LLP more than two decades ago. The founders stood to collect $500-million each from the deal, Bloomberg News reported, adding that Prosus has been selling off stakes in its holdings in Chinese internet giants Tencent Holdings and JD.com to fund a share buyback.

Naspers has reiterated that it remains committed to the Indian market and growing its existing businesses in the region.

Reuters reported that BillDesk processed $92-billion of payments in the year ending 31 March 2021, and had a net profit of 2.71-billion Indian rupees (R668-million) for that period, according to figures released at the time of the acquisition. BM/DM