Prosus sells piece of PayU to Rapyd; eye on Indian market

In a significant move, for a total cash consideration of $610 million, fintech firm Rapyd that provides APIs to enable payments, card issuing, digital wallet and other financial services to companies like Uber and Ikea, has acquired a major chunk of PayU – the fintech arm of internet giant Prosus.

Rapyd’s current valuation stands at $8.75 billion and it has raised more than $806 million. The company’s current band of investors includes Fidelity, Dragoneer, General Catalyst and Target Global, as well fintech giant Stripe.

The investment firm says PayU will now focus on its growing Indian payments and credit business.

“We are now fully focused on the huge fintech opportunity in India, where PayU is the leading payments service provider and is rapidly expanding its credit offering," says Bob van Dijk, Prosus' chief executive officer.

He further notes that PayU’s GPO business has grown considerably in recent years, with payment volumes growing more than 300% in the past five years alone.

“The business occupies a strong position in the global fintech space as a result of the investments made in building an exceptional local payments business, with global scale," adds Dijk.

Interestingly, according to the company, PayU’s payments business is one of the largest, fastest growing and most profitable businesses in India among non-banking players, delivering 42% year-on-year growth in the last year alone.

“Overall, India's digital financial services opportunity continues to be large and under-penetrated, offering healthy growth for the PayU India business. In areas like lending and digital credit products, where PayU India already supports 2 million customers and over 450,000 merchants, we see strong growth potential for the future,” shares Laurent le Moal, chief executive officer of PayU.

While PayU’s operations span more than 30 countries, Prosus is not selling all of these. It is selling the segment called the “Global Payment Organisation” (GPO) and will hold on to the business operations in PayU’s arguably three biggest regions – India, Turkey and Southeast Asia.

“The synergies with PayU GPO include a richer technology stack, expanded geographic licensing, and broader market reach for our combined merchant portfolios. We’re helping businesses around the world liberate global commerce, and we’re very excited to have PayU’s GPO team join us on this journey,” says Rapyd CEO and co-founder Arik Shtilman.

Recognising  PayU GPO payment business’ contribution to PayU’s success, the CEO adds, “It was extremely important to us to work with a visionary company like Rapyd, one that can truly expand our solutions and meet the evolving needs of the dynamic fintech landscape across the globe.”

This sale not only brings into focus Prosus’ efforts to streamline its operations and cut out assets that are pulling it down, it also underscores Rapyd’s ambitions to build out more scale and reach globally. While strengthening its position in key vertical markets including e-commerce, logistics and transportation, this will also enable greater reach for Rapyd’s wider payments operations en route to an IPO, with a portfolio of Tier 1 enterprise clients including Adidas, Google, Ikea, Meta, Netflix, Uber, and around 100 other considerable enterprise businesses.

In its quarterly report released in June, Prosus said that its payments division generated $903 million in consolidated revenues, with India being profitable and driving the overall segment's growth rate. However, it also added that the GPO business contributed to overall trading losses of $83 million.