The warning signs were all there. Slow response time, lack of communication, lack of patience… Yet neither side rushed in to save the deal. Last week, Prosus, the Dutch unit of South African tech company Naspers, pulled out of its $4.7 billion all-cash deal to acquire BillDesk, leaving the Indian fintech community already shaken.
If the deal had been consummated, it would’ve been a validation of the maturity of the Indian fintech industry—Prosus wanted to build a PayPal out of India—and a force multiplier for PEs who’ve taken large bets on India and need to prove that this market is not a one-way street.
But the deal didn’t go through. An investor in payments companies described the outcome to Arundhati, the author of today’s story, as a “corporate crime”. Many are speculating that Prosus walked out of the deal over the price. But people close to both Prosus and BillDesk informed that there were no renegotiations on the price at any stage after the deal was struck. Instead, it’s a combination of factors. Money could be one.
Since signing the deal, Prosus’ market capitalisation may have more than halved from $282 billion to $112 billion, but it raised nearly $15 billion by selling a stake in the Chinese gaming giant Tencent. Call it buyer’s remorse or seller’s oversight, BillDesk’s shareholders didn’t see this coming. What would irk them even more is the manner in which PayU and Prosus have dealt with the matter. They neither gave a prior warning nor engaged with BillDesk’s shareholders after the 30 September emailed.
It’s a bit of a mystery. As recently as June, Prosus’ CEO said the PayU-BillDesk deal was “not a multiple-based story but a fundamental DCF [discounted cash flow]-driven business case with solid synergies”.
Now the synergies go out the window. And viewed from the old competitive lens, BillDesk is left exposed, having shared a lot of sensitive information with PayU. Prosus wanted this deal badly; BillDesk didn’t go looking for a buyer in the first place. And yet they are here today. A definitive article’s story, which, to everyone’s dismay, did not have a Frank Capra ending but is a riveting read nonetheless!!