Cred to buy expense management firm Happay; deal valued at $180 mn

Credit card bill payments platform Cred will acquire Happay in a cash and stock deal, valuing the expense management firm at approximately $180 million, the company said in a statement on Wednesday.

Happay will operate as a separate entity with Cred’s leadership team working closely with it to leverage Cred’s ecosystem, expand product offerings and scale up operations, Cred added. Further, all of Happay’s 230 employees will be eligible for benefits extended to Cred’s employees, including its ESOP (employee stock ownership plan) programme.   

Happay’s acquisition is expected to bring synergies between the credit card bill payments platform offered by Cred and Happay’s platform that offers business expenses, travel bookings and payments.

“Happay’s product strength, customer experience, and vision align with our intent at Cred to reward responsible financial behaviour and we’re excited to partner them in their journey towards leading the category,” said Kunal Shah, founder, Cred.   

Happay--a business expense, payments and travel management platform--claims to be serving more than 6,000 businesses. The company says it manages work-related expenses of over 1 million users globally who spend nearly $1 billion annually. Happay also claims to be the only unified platform that automates the spend management workflow and is betting on contactless, and paperless methods that it foresees people following in the post-pandemic world.    

“The next phase of our growth will come from building scale, brand, and distribution. The CRED team’s experience in this regard is unparalleled, and we’re excited to learn and grow together,” said Anshul Rai, co-founder, chief executive officer, Happay. 

Happay was founded in 2012 by the Indian Institute of Technology-Kharagpur alumni--Rai and Varun Rathiwas. It initially started out as a consumer-facing peer-to-peer mobile wallet, before pivoting to an expense management platform for enterprises. Using Happay’s prepaid business expense cards and its cloud platform, employees can add and update business expenses on the go, doing away with the need for cash and paper. 

The company’s business expense management solutions include petty cash management, expense report automation, prepaid cards for business expenses, travel and expense management, employee flexible benefits, international travel cards and a digital marketing expense card. 

With the help of a single centralised platform, a company gets real-time visibility and control on expenses, while accountants can reconcile expense reports and can integrate the same into the accounting software. 

The company in 2017 raised $10 million (Rs 65.13 crore) in a Series B funding round led by existing investor Sequoia Capital, VCCircle had reported. Happay had raised $7.2 million in July 2015 from Sequoia Capital and Prime Venture Partners, according to data available with VCCEdge, the data and research platform of VCCircle

In April 2015, it had also raised $500,000 (Rs 3.1 crore) from Prime Venture Partners. 

While Sequoia Capital has around 32.4% stake in Happay, founders Varun Rathi and Anshul Rai hold about 30% stake, Prime Venture Partners has about 26% stake in the firm, and the rest is owned by Axiom Capital, Times Internet Ltd, and others. 

Happay’s acquisition comes at a time when Cred is looking beyond its mainstay platform that enables users to do credit card payments. In October, the company acquired liquor delivery startup HipBar Pvt. Ltd, in a bid to make forays into the wallet payments business. HipBar owns a prepaid payment instrument (PPI) licence granted by the Reserve Bank of India (RBI), which permits companies to operate payments systems such as digital wallets, pre-paid transit cards, vouchers and so on.   

While details of the deal are not known, according to the corporate affairs ministry’s website, Cred founder Shah and his brother Rohan Shah Naresh have joined the board of HipBar as directors on 12 October. Only one of the old HipBar founders, Prasanna Natarajan, is still a director. 

Cred is also reportedly in talks to acquire two more startups--Dineout, the restaurant services and reservation platform owned by Times Internet, and Wint Wealth--an alternate investment platform that enables users to invest in financial products. Happay, incidentally, has been incubated by startup accelerator TLabs, which was set up within Times Internet in 2011.

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