Online payment company PayU is in the process of acquiring a controlling stake in PaySense, an Indian digital credit platform, for an equity valuation of $185 million.
As reported by Economic Times on Friday, the entire deal will be done in cash and put the payment giant in control of 80 percent of PaySense’s stocks. Currently, PayU owns 20 percent of the stocks of the credit platform.
The Prosus-owned payments giant will buy the PaySense stakes from all existing venture capitals and venture capitals, which include Nexus Ventures Partners, Jungle Ventures, and Rocketship, as all of them decided to exit the company. The buyout will be done in two stages.
Targeting the credit industry in a major market
With the acquisition, the payments company has decided to merge its lending business LazyPay with PayU. Siddhartha Jajodia, PayU’s global head of credit, also revealed that the company would infuse $200 million in PaySense in the next 24 months, including an immediate investment of $65 million. This will take the total deal size to over $300 million.
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PayU’s goal behind the acquisition is to capture the Indian lending market, which, per BCG research, has the potential to touch $1 trillion in the next five years.
Prashanth Ranganathan, the founder and CEO of PaySense, will lead the new credit-focused entity in India as its chief. He will also hold a stake in the merged entity. Along with the leadership, the workforce of PaySense will also move to the new entity.
“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,” Jajodia told the news outlet.
As Finance Magnates reported, last year, PayU acquired payments technology company Wibmo for $70 million.