BillDesk, the Indian fintech firm that predates the word ‘fintech’, will soon be acquired by global tech investor Prosus in a $4.7 billion all-cash deal. MN Srinivasu, one of the firm’s co-founders, told us why BillDesk said yes to Prosus and what the future has in store for the company he helped build 21 years ago.
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Prosus deal adds to our heft, says BillDesk cofounder
BillDesk, one of India’s oldest payment gateway companies, is set to be acquired by global technology investor Prosus for $4.7 billion in what will be one of the biggest deals ever in India’s digital payments industry.
We spoke to MN Srinivasu — who co-founded the company with Ajay Kaushal and Karthik Ganapathy in 2000 — about the deal the what the future holds for BillDesk. Here are some excerpts from the interview:
BillDesk has had many potential suitors in the past. What made you say yes to Prosus?
This is the first time that we engaged with anyone on a transaction after our last funding round in 2018/19. This deal came at a time when we [were wondering] whether to go for an IPO or look for the next stage of growth. We are a fairly large player, and this transaction just accelerates what can be done on the platform. It also brings to the table an enormously large and well-respected tech investor like Prosus. It provides access to a large pool of strategic capital that can be relied upon to grow the platform.
Will BillDesk continue to remain an independent entity? How will you draw synergies with PayU?
This is an investment transaction, not a merger transaction. Until regulators approve the deal, we will both continue to operate exactly as we do today. Post-approvals, we will explore what’s the best possible way to grow.
Will the founders stay on once the deal closes?
Absolutely. This deal is subject to regulatory approval. Once those clearances are in place, we will see how best to quickly leverage the strengths and offerings of both the BillDesk and PayU platforms to deliver the needs of merchants and banking partners.
Besides the Competition Commission of India, will you need the Reserve Bank of India’s approval?
We will do everything needed to assure that the transaction works well for the ecosystem and furthers the digital payments focus and agenda of the RBI and the government.
Is there a rough timeline by when you expect the regulatory approvals to come through?
I am hopeful that the necessary regulatory approvals will come over the next four to five months.
Prosus and PayU are more than just payment processors. They have forayed into financial services and even wealth management businesses in India. How does that play out for you?
From our perspective, there is a way (in which) we have built the business. Now, we have an opportunity with a strategic partner which has financial backing. Rarely do you get that combination. We are at over $90 billion in annual transaction volumes. When you add that to the PayU volumes, we are creating a scale that helps devise and build products and service offerings for the diverse merchants we cater to. We expect synergies out of such a combination. Since we have a larger team and resources, we can also accelerate some of our product innovations. It will be the same thing from their perspective.
Are there any equity incentives for founders as part of the deal?
It is a simple, all-cash deal in the sense that 100% of BillDesk, including the equity held by founders, is being acquired. Thereafter, any other program or equity incentive will be part of the regular incentive program that would typically operate as part of the standard organization-employee engagement processes.
How has your journey been as an entrepreneur – building the business from scratch – over the last 20 years
It has been a long journey, but a very fulfilling one. We are all as passionate about it today as we were 20 years ago. We started the business at a time when the term ‘fintech’ itself wasn’t in vogue. Internet access was limited to a very small set of Indians. Given our consulting, technology, and financial services backgrounds prior to BillDesk, we had a view of how markets in India would likely evolve with respect to electronic payments. From there on, we simply worked hard towards that vision. It has been an extremely interesting journey – the first capital we raised was roughly a quarter of a million dollars in today’s terms. Large capital was initially hard to come by. What it helped do was to focus sharply on fundamental drivers of value, and by the end of the first phase of growth, we were profitable. In a sense, this entire business has been built on a capital of not more than $5-$7 million, and after that we have always been a cash generator. In the second phase, multiple other players entered the market with different models. Many of them fell by the wayside. Our model has always been to build a sustainable business. Bill payments are now regulated, but when we started offering these services 20 years ago, our focus was to offer it in a model that was beneficial to all partners. The customers, the merchants, the utilities and banks – all our partners benefited from our model… Over the last 5-7 years, with a strong national focus on digitization and on the back of some robust digital payments frameworks put in place by the RBI, it has been a period of hyper-growth.
Source: Economic Times