Domestic payment gateway BillDesk is once again in the market looking for buyers after its promoters attempted to sell it unsuccessfully two years ago.
This time around, all the BillDesk promoters are trying to sell-off the entire business, in the wake of a rapidly growing competition in the digital payment services space and thriving e-commerce industry in the country.
Two persons with direct knowledge of BillDesk’s plans confirmed this, adding that at least eight investment bankers have been called by BillDesk promoters and the company’s single largest shareholder General Atlantic for discussions on shortlisting a suitor.
BillDesk was founded in 2000 by M.N. Srinivasu, Ajay Kaushal and Karthik Ganapathy.
“One round of meetings with bankers happened early this week and a detailed plan will be discussed next week,” said the first person.
BillDesk has the largest roster of business clients in India and handles 50-60% of billing transactions.
“That’s like an asset that no one has been able to build in India so far. But, a complete, end-to-end, integrated payment system is required today because extremely large global players in the payment industry are coming in,” said the first person.
On 28 March 2018, Mint reported payments gateway BillDesk held talks with three payment giants—PayU, American Express and PayPal, seeking a valuation of $1.5-2 billion.
The BillDesk promoters are currently talking to eight investment bankers — including Goldman Sachs, JP Morgan and Morgan Stanley — for awarding the final sale mandate, according to the first person.
US-based global payments processor Visa bought a minority stake in Billdesk, valuing the company at an estimated $1.8 billion, in February last year. The transaction involved an investment of Rs.537.06 crore for 2.46 lakhs equity share at a price of ₹21,832.04 each. On the other hand, Billdesk received Rs. 65.5 crore in lieu of 30,000 equity shares at the same rate from Claymore Investments.
In fact, Visa’s stake purchase gave BillDesk an entry into India’s Unicorn club of private technology companies.
BillDesk promoters are in a rush to sell off, despite the subdued deal sentiment, due to two reasons. First, the demand for digital payment platforms and e-wallets embedded with e-commerce benefits has gone up significantly over the past year, while BillDesk has remained purely as a payment gateway company enabling only banking and merchant website transactions. Consequently, BillDesk lags behind the competition today in its ability to offer an end-to-end payments solution suite. Second, private equity investors, especially General Atlantic (the largest shareholder), also seem to be gravitating towards companies that offer more customer-facing digital payment and e-commerce services.
Additionally, commission income for all payment aggregators, including BillDesk, has come down and the Reserve Bank of India, in April, has brought all aggregators under its direct purview and introduced a stringent set of regulations for such companies.
BillDesk’s investors include General Atlantic, TA Associates, Clearstone Venture and Temasek Holdings. In 2001, BillDesk received its first investment from SIDBI Venture Capital Ltd and Bank of Baroda. In 2006, Clearstone Venture Partners and State Bank of India jointly invested $7.5 million in the company. In 2012, US-based TA Associates made an undisclosed investment in BillDesk. In 2015, General Atlantic and Temasek invested $200 million in BillDesk, valuing the company at $1 billion, according to BillDesk’s public disclosures.
General Atlantic holds around 35% in BillDesk. Clearstone had invested $5 million in 2006. In 2012, TA Associates had acquired a minority stake in BillDesk, which is a part of IndiaIdeas.com Ltd.
However, the payment services industry has drastically evolved over the past year with consumer-facing players like PayTM, Google Pay, PhonePe, MobiKwik, JioPay and other UPI-based digital payment companies fiercely competing with each other by not only offering online payment facilities but also a wide range of e-commerce services. Bill Desk derives its value from its large roster with over 80 billers, which the company has created in a span of two decades. The firm handles over $60 billion worth of transactions every year and is the largest payment gateway company in India.
BillDesk competes with Naspers-owned PayU, Infibeam-owned CC Avenues and Tiger Global-backed Razorpay.
