BillDesk-PayU Deal: What Destroyed the $4.7 bn. Agreement?
Recently, the Indian fintech sector has been experiencing rough winds with stock market crashes, inflation blues, and regulatory headwinds. There are some growth issues with unstable revenue models too. BillDesk has stood through all the challenges for nearly twenty years. However, BillDesk’s future is becoming slightly shaky in 2022.
PayU, one of the global payment companies owned by Prosus decided to acquire BillDesk for $4.7 billion in August 2021. People anticipated it to be the second-largest acquisition after the $16 billion Walmart’s Flipkart acquisition. PayU would have tremendous benefits with BillDesk in the Indian market as the combined entity’s valuation is $12 billion. But now the deal is dead. Unfortunately, the agreement was terminated due to the non-fulfillment of a few conditions.
BillDesk, founded in 2000, roped the digital payments in government contracts. It allowed several banks to make digital bill payments and retail customers by offering solutions through their touchpoints. Partnering with HDFC and SBI, BillDesk gave a digital facelift single-handedly to the payments system even when Paytm, PhonePe, and Razorpay were not existing. Ram Rustogi of FACE believed that BillDesk is used as a benchmark for every startup.
Billdesk’s recurring bill payments are another well-regulated segment. The operating revenue of BillDesk in FY21 clearly shows how it leveraged the demand for digital payments. From Rs 1,341 crores in FY20, the operating revenue moved to Rs 1.845 crores in FY21. PAT hiked from Rs 231.5 crores in FY20 to Rs 270.9 crores in FY21.
Despite the deal going dead, BillDesk remains stable by retaining a few of its large clients in its pocket. As per reports, the funding winter may be a hurdle in the future; the negotiations failed with several investors. The cash infusion is essential if BillDesk has to move along with fintech startups and know how to carefully place its coins in the game of evolving digital selling and marketing.
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