L-CM-0006-U: Mergers, Acquisitions, and Private Equity-Analysis - Law Assignment Help

Assignment Task

Background

1. Prosus N.V. (“Prosus”) recently made an announcement to the effect that it has reached an agreement, along with its fintech subsidiary ‘PayU’ (“PayU India”), to acquire Indian payment gateway service provider ‘BillDesk’ (“BillDesk”) for $4.7 billion (collectively, the “BillDesk Acquisition”).

2. This appears to be the second largest exit by an Indian start-up through an acquisition (after Flipkart), past Snapdeal’s $400 million acquisition of Freecharge and BYJU’s $950 million acquisition of Aakash Educational Services earlier in 2021.

3. The BillDesk Acquisition remains subject to approval from the Competition Commission of India (CCI).

4. In the past, PayU India had acquired payments technology company CitrusPay (in 2016) for $160 million. It then acquired digital credit platform Paysense in 2020 for $185 million.

5. The BillDesk Acquisition, if cleared, will bring Prosus’s cumulative investment in Indian tech to more than $10 billion.

6. Together, PayU India and BillDesk will be able to meet the changing payments needs of digital consumers, merchants and government enterprises in India and offer state-of-the-art technology to even more of the excluded sections of society, while adhering to the regulatory environment in India and delivering robust consumer protection, according to Prosus.

7. With the acquisition and integration of BillDesk, PayU India will be handling total payment volumes (“TPV”) of $147 billion.

8. PayU India and BillDesk run complementary businesses within India’s digital payment industry. Together, the two expect to create a financial ecosystem handling four billion transactions annually – four times PayU India’s current levels (in India).

9. Payments for domestic and cross border transactions is one of the major revenue sources for PayU India globally.

10. For the financial year ended March 2021, PayU India increased its TPV 51% year-on-year to $55 billion across India, Latin America and Europe, the Middle East and Africa (EMEA). The BillDesk Acquisition is expected to bolster this growth further.

11. According to PayU India, the BillDesk Acquisition will stimulate both innovation and competition within India’s digital payments industry. This will not only help to strengthen India’s digital economy, but also bring financial services to those who may have historically been excluded. This ambition is fully aligned with the Government of India’s vision of ‘Digital India’.

12. BillDesk, founded in 2000, is one of the leading payment gateway providers in the country, and was a strong competitor to PayU in India.

13. According to BillDesk, it (BillDesk) has been a pioneer in driving digital payments in India for well over a decade. The investment by Prosus through the BillDesk Acquisition validates the significant opportunity in India for digital payments that is being propelled by innovation and the progressive regulatory framework put into place by the Reserve Bank of India (RBI), India’s central bank

ASSIGNMENT

Pursuant to the ‘Background’ provided above, please critically analyze the BillDesk Acquisition using the conceptual apparatus and learnings from the M&A and PE course.

It is recommended that you read up more on the BillDesk Acquisition before attempting your analysis, including (but not restricted to) readings available in the public domain.

Please use your best judgement in providing a nuanced analysis of the deal.

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