PayU is to acquire a controlling interest in Indian digital credit platform PaySense for $185 million.
PayU intends to merge its Indian consumer lending business LazyPay with PaySense to create a full-stack digital lending platform, injecting a total of up to $200M in the new enterprise in the form of equity capital.
$65M of the total amount will be immediately invested, while the balance will be infused in the next 24 months to grow the loan book.
PayU's unified digital credit platform will be offered direct to consumers and also through co-lending deals with banks and alternative lenders.
While India’s banked population has more than doubled since 2011 to over 80%, credit bureau coverage is still limited. BCG research shows that India’s digital lending market represents a $1 trillion opportunity over the next five years.
Sayali Karanjkar, PaySense co-founder, comments “We continue to witness the massively untapped market potential for short-term collateral-free loans among the digitally savvy aspirational youth. Both PayU and PaySense believe in leveraging the enormous potential of technology to unlock credit and financial services for vastly underserved consumers in India and this merger reflects our allied vision of delivering financial freedom to all."
As a part of the deal, Prashanth Ranganathan, currently PaySense CEO will lead PayU’s credit business in India as the CEO of the new enterprise. He will continue to retain a stake in the merged enterprise, while all the other investors and shareholders will exit.
Naspers-owned PayU has been on a tear of late, spending north of $850 million over the past three years to build a scale presence in online payment processing in markets worldwide. The investment in PaySense follows the $70 million acquisition last year of Cupertino, California-based Wibmo, one of the largest providers of digital payment security technology and services in India.