Digital payments network Visa is likely to invest over $250 million in Mumbai-based payments gateway BillDesk, valuing the company at around $1.5-2 billion. BillDesk, which had earlier been in discussions for a strategic sale, has decided to opt for a financing round. The fundraising is reportedly going to be a mix of primary and secondary transactions.
BillDesk is the largest online payments processing company in the country and competes with the likes of Naspers that is backed PayU, CCAvenue and a bunch of other startups like RazorPay. “The deal is in the final stages of completion, it’s the valuation which is being negotiated,” a person familiar with the talks said.
In 2016, General Atlantic had picked up a 20% stake in BillDesk from its current investors, valuing the company at $800 million.
BillDesk is one of the rarest profitable internet companies in India. For Visa, an investment in BillDesk would help the American firm make a mark in its position in the payments ecosystem in India, which has seen disruption with the introduction of new modes like the Unified Payments Interface (UPI). The entry of global tech giants like WhatsApp Pay and Google’s Tez, as well as homegrown players like Flipkart’s PhonePe, has made the UPI platform extremely competitive. Visa’s investment will also give Bill-Desk a strong foothold in the online merchant acquisition side of the business.
BillDesk processes payments worth almost $50 billion per year and leads the charts for online bill payments. In the e-commerce segment, it is neck-to-neck with PayU, while CCAvenue and others come in next. For the year 2017, it clocked Rs 950 crore in revenue and has been profitable for over a decade now. Typically, payment firms generate around 1-2% of gross revenue which comes from the commission that they fetch from merchants, in a low-margin business.
BillDesk founders are negotiating a higher value of $2 billion in the backdrop of a hugely successful IPO of Dutch fintech startup and PayPal rival Adyen, sources said. The payments processing platform IPO-ed at over $8-billion valuation and saw its shares surge 90% as it doubled its market cap. “With RuPay and UPI gaining share, it has led to players like Visa and Mastercard, looking to tap newer avenues and bolster their space in the fast-growing digital payments market in India,” said another source on the condition of anonymity.