This article is written by Vanya Verma from O.P. Jindal Global University. This article covers the acquisition of BillDesk by PayU, it’s internal analysis and legal framework governing acquisition in India.


PayU, a fintech company funded by Prosus, has purchased BillDesk, India’s first payment gateway, for $4.7 billion, making it the country’s largest digital payment acquisition. Prosus plans to expand its payments and fintech firm PayU with this acquisition. PayU is one of the largest payment providers in the world, with a total payment volume (TPV) of $147 billion. This acquisition is noteworthy since BillDesk, which has been operating in India for over 20 years, is one of the country’s oldest payment gateways, covering over 60% of the country’s online payment transactions. The acquisition’s net assets were valued at $256.9 million, and the Profit After Tax (PAT) for the year 2021 was $36.8 million, according to Prosus.

PayU’s $4.7 billion acquisition of BillDesk appears to be the second largest exit by an Indian start-up through an acquisition (after Flipkart), surpassing Snapdeal’s $400 million acquisition of Freecharge and BYJU’s $950 million acquisition of Aakash Educational Services earlier in 2021. This puts PayU in a strong position to capitalise on India’s looming FinTech boom. 

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PayU is the favoured payment gateway for a wide range of internet enterprises, whereas BillDesk leads the government and Banking, Financial Services, and Insurance (BFSI) industries. BillDesk has a near monopoly in payment processing for government bodies, which is highly profitable because it is a steady stream of cash that is always expanding, unlike e-commerce, tourism, or other companies that have occasional spikes and troughs. BillDesk’s banking relationships, on the other hand, offer new markets for PayU rather than competing with it, and no electronic payment provider can remain powerful and influential without adapting to the new economy. BillDesk had been looking for a buyer for the past two years due to increased competition from RazorPay, CCAvenues, and others.

About PayU

  • The company was founded in 2002 and is situated in Hoofddorp, Netherlands. It allows online merchants to accept and process payments through payment systems that may be integrated into web and mobile applications. PayU is a global company with operations in more than 50 countries and employees from 43 different nations.
  • PayU is Prosus’ payments and fintech division. Prosus is a global consumer internet company and one of the world’s top technology investors. Prosus is majority owned by Naspers and has a primary listing on Euronext Amsterdam (AEX:PRX) and a secondary listing on the Johannesburg Stock Exchange (XJSE:PRX).
  • PayU’s cutting-edge and award-winning technology delivers payment gateway solutions to internet businesses. PayU is the primary payment partner for e-commerce merchants in India, serving over 4,50,000+ merchants with over 100+ payment options, including all major e-commerce companies and the bulk of airline enterprises.
  • They aim to provide a safe and secure ecosystem that allows anybody to send or receive payments, while also providing ease and trust, through ongoing technology innovation.

About BillDesk

  • BillDesk is a Mumbai, India-based internet payment gateway startup. Customers in the e-commerce, financial services, retail, and other sectors can use the company’s payment solutions. Billdesk is one of India’s oldest payment gateways, powering about 60% of the country’s online bill payments.
  • BillDesk, an Indian online payment gateway startup founded in 2000 by a team of ex-Arthur Andersen employees, continues to be at the forefront of the digital payments’ evolution in India, offering internet-based payments technologies that enable users to make seamless online payments.
  • BillDesk is a dependable payment platform for enterprise-wide electronic payments and collections, as well as related reconciliation and settlement activities, spanning different delivery channels and using a variety of payment methods, with over 20 years of market leadership.
  • BillDesk assists consumers in organising, managing, and paying any recurrent or recurring bills they may have. Customers can also check all of their previous payments, as well as receive and pay using this portal. Customers can now conduct financial transactions in a safer, faster, and more efficient manner.
  • Billdesk began by linking banks with any merchant or utility that needed to take client payments. BillDesk would only take a cut from the merchant, bank, or utility for every transaction it facilitated, which was a key aspect of this business model.
  • Many Indian organisations, businesses, and banks use the platform. This comprises telecommunications, insurance, e-commerce, financial services, charities, and a variety of entertainment providers.
  • BillDesk is an aggregator platform in India that allows users to make various online and mobile payments.

Purchase consideration of the deal

On a debt-free and cash-free basis, the deal’s purchase consideration is INR 345 million, or USD $4.7 billion, and it is subject to a normalised level of working capital at closing. The purchase will be made on an all-cash basis, with the full purchase price due at the time of closing.

Internal analysis of the acquisition


BillDesk is India’s largest payment processor, handling the majority of the country’s transactions. It also offers timely customer service and high transaction accuracy through the internet. PayU and BillDesk will be able to meet the evolving payment needs of Indian digital consumers, government enterprises, and merchants, as well as provide cutting-edge technology to even more underserved groups by providing robust consumer protection and adhering to India’s regulatory environment, as a result of the acquisition. BillDesk and PayU both operate a digital payment company in India, and by combining their efforts, they would be able to build a financial ecosystem capable of handling 4 billion transactions per year, which is four times the current level of PayU in India.


If BillDesk wants to grow even more, it needs to focus more on e-commerce and retail transactions. There is still a sizable portion of the retail market that is either unaware of or has little knowledge of the company’s retail potential, and they continue to rely on CCAvenue.


Customers have a high degree of trust in the BillDesk payment gateway and have great reliability upon it when it comes to making payments using this platform, which may also be used in retail. It could even look into some new and inventive payment solutions to assist the company in maintaining its market leadership. Together, PayU and BillDesk will build a versatile platform that can scale across all payment verticals. They’ll also build a stronger foundation on which to build further growth prospects in the digital banking sector.


The dominance of CC Avenue in the e-commerce sector and Atoms in mobile payments are both threats to the company. With the rise of online and internet-based payments, a flood of newer payment mechanisms, such as NFC, have sprung up.

Legal framework governing acquisition in India

The Companies Act, 2013

The Companies Act of 2013 is the most important and essential law that regulates all companies registered in India. The terms of the Companies Act must be followed in all company activities and business transactions, including mergers and acquisitions. Sections 230 to 240 of the Act and rules govern mergers and acquisitions transactions.

The Competition Act, 2002 

This Act controls mergers and acquisitions in India. It was created with the goal of preventing widespread harm from monetary control decisions by allowing for monopoly administration, restrictive and unfair trade to protect consumer interests, ensuring that the economic system’s procedures do not lead to the concentration of financial control in the hands of a few people, and allowing for the rule of dominance. The Competition Commission of India was established under the Competition Act to grant antitrust clearances and regulate mergers that have a negative impact on competition in the country.

The CCI must be notified of any proposed combination or other document for the acquisition or acquisition of control, or for the approval of any proposal linked to merger or amalgamation by the Board of Directors (BOD) of the firms involved, within 30 days of the execution of any agreement.

After receiving a notice, the CCI conducts an inquiry in two steps. The CCI evaluates, prima facie, whether the proposed combination is likely to generate an Appreciable Adverse Effect on Competition Agreements (AAEC) within 30 working days of receiving notification. The CCI will approve the proposed combination if it is determined that it will not result in an AAEC.

If the CCI feels the combination is likely to have an AAEC, the CCI initiates a second phase of in-depth investigation that lasts 210 calendar days. After inspection, the CCI may approve, refuse, or approve with modifications the combination.

The Competition Act has extraterritorial application, meaning the CCI’s jurisdiction extends to transactions that occur outside of India. The implication is that even if the purchases, sellers, or target entities are situated outside of India, combinations involving enterprises with assets or turnover in India that exceed the prescribed thresholds set out in the Competition Act will be scrutinised by the CCI. The current acquisition of BillDesk by Prosus is pending as it is subject to the approval of CCI.

The Securities and Exchange Board (SEBI)

The Securities and Exchange Board of India (SEBI) is a regulatory agency that publishes rules and directives to regulate the securities industry. M&A transactions are regulated by SEBI under the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers, Second Amendment) Regulation, 2018. This was developed to control takeovers and described the mechanism for creating a transaction with an acquirer for the aim of acquiring publicly owned shares or stakes in another firm in a more acceptable manner.

Foreign Direct Investment Policy 

Foreign investment in India is governed by the Foreign Direct Investment Policy. The FDI Guidelines regulate the flow of foreign investment into and out of India, as well as the instruments that can be used, sectoral caps for foreign investment, and entry requirements. It includes minimum capitalization requirements, lock-in periods, and local sourcing requirements.

The Foreign Exchange Management Act, 1999 

The Reserve Bank of India (RBI) is in charge of the foreign exchange management, and the policies of the Act manage the influx and outflow of capital in India. According to the FEMA Regulations, any transaction carried out in the same manner as a cross-border merger is regarded as RBI-approved. The Act becomes necessary as Prosus is a foreign company and during acquisition the Act becomes essential as there will be a flow of foreign capital.

The Income Tax Act, 1961

The tax treatment of M&A transactions in India is governed under the Act and by the Income Tax Department and the double taxation avoidance treaties signed by the Indian Government.


PayU might become a market leader not only in India, but also in the Asian Digital Payments Market, thanks to the anticipated synergies. Given the high expenses of expansion and a scarcity of knowledge, inorganic growth in the FinTech business appears to be the best option. The deal, which has yet to be approved by India’s Competition Commission, has the potential to catalyse the FinTech industry by establishing PayU as the market’s leading digital payment provider and sending strong signals to domestic and international investors about the promising investment opportunities available in the Indian startup ecosystem.


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