The biggest acquisition deal in India’s digital payments sector has been called off, apparently over its $4.7 billion valuation.
The Netherland-listed investment major Prosus has terminated its Indian subsidiary PayU Payments’ all-cash acquisition of BillDesk, India’s online payments gateway.
“Certain conditions precedent were not fulfilled by the September 30, 2022, long stop date, causing the agreement to be terminated automatically,” Eoin Ryan, head of investor relations at Prosus, said yesterday (Oct. 3).
This has shocked stakeholders as the PayU-BillDesk deal was in the works for more than a year before getting a nod from India’s Competition Commission of India a month ago.
Tech stocks have sold off indiscriminately this year, regardless of reputation.
Several technology stocks, including that of Indian digital payments company Paytm, have gone through a reset in valuations. The valuations of major US payments firms have also fallen by up to 50-70% in recent months.
For instance, the buy-now-pay-later Swedish player Klarna, valued at $45.6 billion when it raised $639 million from SoftBank in 2021, is now valued at $6.5 billion.
Besides, the changing regulatory landscape in India’s digital payments ecosystem, pertaining to the Reserve Bank of India’s card tokenization, is also making global investors apprehensive.
The BillDesk acquisition was to give PayU access to its large customer base of small merchants in India, taking their cumulative gross revenues to $752 billion.