PayU is buying a controlling stake in fintech startup PaySense at a valuation of $185 million and plans to merge it with its credit score enterprise LazyPay because the nation’s largest funds processor aggressively expands its monetary companies providing.
The Prosus-owned funds big mentioned on Friday that it’ll pump $200 million — $65 million of which is being instantly invested — into the brand new enterprise within the type of fairness capital over the following two years. PaySense, which employs about 240 individuals, has served greater than 5.5 million customers up to now, a high government mentioned.
Previous to at this time’s announcement, PaySense had raised about $25.6 million from Nexus Enterprise Companions, and Jungle Ventures, amongst others. PayU grew to become an investor within the five-year-old startup’s Collection B financing spherical in 2018. Regulatory filings present that PaySense was valued at about $48.7 million then.
The merger will assist PayU solidify its presence within the credit score enterprise and turn out to be one of many largest gamers, mentioned Siddhartha Jajodia, world head of Credit score at PayU, in an interview with TechCrunch. “It’s the biggest merger of its form in India,” he mentioned. The mixed entity is valued at $300 million, he mentioned.
PaySense allows customers to safe long-term credit score for financing their new automobile purchases and different bills. A few of its choices overlap with these of LazyPay, which primarily focuses on offering short-term credit score to customers to facilitate orders on meals supply platforms, e-commerce web sites and different companies. Its credit score ranges between $210 and $7,030.
Cumulatively, the 2 companies have disbursed greater than $280 million in credit score to customers, mentioned Jajodia. He goals to take this to “a few billion dollars” within the subsequent 5 years.
As a part of the deal, PaySense and LazyPay will construct a typical and shared know-how infrastructure. However at the least for the fast future, LazyPay and PaySense will proceed to be provided as separate companies to customers, defined Prashanth Ranganathan, founder and chief government of PaySense, in an interview with TechCrunch.
“Over time, as the companies get nearer, we are going to make a name if a consolidation of manufacturers is required. However for now, we are going to let customers direct us,” added Ranganathan, who will function the chief government of the mixed entity.
There are a few billion debit playing cards in circulation in India at this time, however solely about 20 million individuals have a bank card. (The official authorities figures present that about 50 million bank cards are energetic in India, however many people are inclined to have a couple of card.)
This has meant that the majority Indians don’t have a conventional credit score rating, to allow them to’t safe loans and a spread of different monetary companies from banks. Scores of startups in India at this time are trying to handle this chance by utilizing different alerts and different information of customers — such because the sort of a smartphone an individual has — to guage whether or not they’re worthy of being granted some credit score.
Digital lending is a $1 trillion alternative (PDF) over the following 4 and a half years in India, in line with estimates from Boston Consulting Group.
PayU’s Jajodia mentioned PaySense and LazyPay will seemingly discover constructing new choices, equivalent to credit score for small and medium companies. He didn’t rule out the potential for getting stakes in additional fintech startups sooner or later. PayU has already invested north of half a billion dollars in its India enterprise. Final yr, it acquired Wibmo for $70 million.
“At PayU, our ambition is to construct monetary companies utilizing information and know-how. Our first two legs have been funds [processing] and credit score. We are going to proceed to scale each of those companies. Even this acquisition was about getting new capabilities and a robust administration workforce. If we discover extra corporations with some distinctive belongings, we could have a look at them,” he mentioned.
PayU leads the funds processing market in India. It competes with Bangalore-based RazorPay. Lately, RazorPay has expanded to serve small companies and enterprises. In November, it launched company bank cards and different companies to strengthen its neo banking play.