JOHANNESBURG - Prosus plans to expand its India e-commerce by acquiring a majority stake in digital-credit provider PaySense, which was valued at $185million (R2.66 billion) for the deal.
Prosus’ share price increased 3.32 percent just after midday on Friday to R1129.41 on the JSE, while the share price increased 2.76percent to 71.59 (R1 142.59) in Amsterdam, indicating the transaction was favourably received by investors. The share closed the day at R1126.23.
Naspers-owned Prosus plans to combine PaySense with its existing consumer-lending operation LazyPay, which is a subsidiary of Prosus’ online services provider in India PayU, a statement said on Friday. A further $200m would be invested in the combined entity over two years.
“While in India the share of adults with a bank account has more than doubled since 2011 to above 80 percent, access to credit remains limited for those without the credit histories traditional lenders rely on to make lending decisions. The combination of LazyPay and PaySense, both pioneers in using alternative data to make lending decisions, will create a new digital lending leader that can help more of the new-to-credit Indian population,” Prosus’ directors said.
BCG research showed India’s digital lending market may represent a $1trillion opportunity over five years.
Naspers has favoured India as a high-growth market for internet businesses and has picked up food delivery and travel booking sites alongside financial-technology providers, through more than $5billion of investments over the past five years.
Some $65m of the $200m would be invested immediately in the merged firm, with the balance to be invested over 24 months.
PayU, a leading online payments service provider in India, also operates in 17 other high-growth markets across the world. It entered the credit space in India with the creation of LazyPay in 2017.
LazyPay helped more than 1.2million borrowers and facilitated more than 42 million credit transactions last year. More than 250 merchants in India offer LazyPay at their checkouts.
LazyPay uses technology to offer credit at the point of purchase, which may not otherwise be available to customers.
PaySense offers personal loans in 43 cities in India and has issued more than 120000 loans to more than 75000 unique borrowers, using alternative data to underwrite credit.
PayU is an existing shareholder in PaySense after participating in PaySense’s Series A and B funding rounds. PaySense chief executive Prashant Ranganathan becomes chief executive of the combined business, PayU Credit. PaySense’s management team will join the PayU Credit team.
The merger was aimed at accelerating PayU’s vision of creating an Indian fin-tech ecosystem that can serve more of the new-to-credit Indian population.
The unified platform would enable third parties such as banks, non-banking financial companies and alternate lenders to co-lend and grow assets, while also enabling borrowers to seamlessly access credit at the point of need.
PayU chief executive Laurent Le Moal said: “This merger will accelerate PayU’s vision of a flourishing alternative credit ecosystem in India This is our biggest opportunity yet to truly democratise credit in India.”