Prosus Ventures-backed payments technology company PayU has bought digital consumer credit startup Paysense in its largest India acquisition.
PayU is acquiring a controlling stake in Paysense Services India Pvt. Ltd and all its assets at a valuation of $185 million (Rs 1,312 crore), Prosus said in a statement.
It also plans to inject up to $200 million as equity capital in the business. Of this, $65 million will be invested immediately and the balance over the next 24 months.
Paysense said in a separate statement the acquisition is worth Rs 2,100 crore ($296 million). It didn’t specify any details.
The transaction is bigger than the deal PayU struck in 2016 to acquire Sequoia Capital-backed Citrus Pay for $130 million.
PayU said it will merge Nexus Venture Partners-backed Paysense with its credit business LazyPay. The combined entity will be known as PayU Credit. Paysense’s management team will join the combined entity.
Paysense co-founder Prashanth Ranganathan will become the chief executive officer of PayU Credit.
PayU CEO Laurent Le Moal said the deal will help the company to build a full-stack digital lending platform, which will enable it to offer credit and financial services to millions of underserved consumers.
Mumbai-based Paysense was founded in 2015 by Ranganathan and Sayali Karanjkar. The company operates a mobile app that enables users to finance online and offline purchases in equated monthly instalments. It says it offers its personal loans in 43 cities in India and that it has issued over 1.2 lakh loans to over 75,000 unique borrowers.
“They [Paysense founders] are demonstrating how technology can make a huge impact in Indian financial services landscape,” Nexus managing director Anup Gupta said.
PayU had first bought a stake in Paysense in July 2018 when it led an $18 million Series B funding round in the company. It had invested $11.5 million at the time. Nexus and Jungle Ventures had also participated in that round.
In May 2017, PaySense had raised $5.3 million in its Series A round led by Jungle Ventures, a Singapore-based venture capital firm. South African technology conglomerate Naspers and existing investor Nexus had also participated in the round. Naspers transferred most of its technology investments to Prosus last year.
Nexus invested around $3-5 million in Paysense in total. VCCircle estimates suggest that Nexus scored a return of around 10 times its initial investment in the four years it stayed committed to Paysense.
Its internal rate of return by selling its stake is likely to be around 80-100%, according to VCCircle estimates. That’s far higher than the 20-30% that private equity and venture capital firms chase in rupee terms in India.