Prosus-owned PayU on Monday said it has terminated the agreement to acquire Mumbai-based online payment gateway BillDesk for $4.7 billion.

"Certain conditions precedent were not fulfilled by the September 30, 2022 long stop date, and the agreement has terminated automatically in accordance with its terms and, accordingly, the proposed transaction will not be implemented," Prosus says in an exchange filing on Amsterdam's Euronext.

"Prosus has been a long-term investor and operator in India - investing close to $6 billion in Indian technology companies since 2005. Prosus remains committed to the Indian market and growing its existing businesses within the region," says the Netherlands-based consumer internet giant.

This comes three weeks after the Competition Commission of India (CCI) approved the acquisition of payment gateway BillDesk by Prosus-backed PayU.

The deal was touted to be the second largest internet deal in India after the acquisition of Flipkart by the U.S. retail giant Walmart Inc.

BillDesk and PayU compete with other fintech players like Paytm, Pine Labs, Razorpay, Infibeam Avenues and MSwipe in the country.

PayU India and BillDesk run complementary businesses within India’s digital payment industry. Together, the two expect to create a financial ecosystem handling 4 billion transactions annually, which is about four times PayU’s current level in India.

Founded in 2014, PayU India provides payment aggregation services that enable merchants (and other entities) to receive payments from their customers across various digital payment methods.

Started in 2000 by M N Srinivasu, Ajay Kaushal and Karthik Ganapathy in a Mumbai apartment, BillDesk has grown to become one of the largest digital payments platforms in India.

The termination of the deal comes at a time when India is experiencing a funding winter – a downturn in investors' confidence towards startups – which is expected to continue for the next 12-18 months, according to a report by market intelligence platform Tracxn.

In August, the Indian startup ecosystem witnessed $885 million in funding, 102 funding rounds and 9 acquisitions, down by 20%, 8%, 18% respectively compared to July 2022.

Meanwhile, the Fund of Funds for Startups (FFS), launched under Startup India initiative in 2016 by Prime Minister Narendra Modi, has committed ₹7,385 crore to 88 Alternative Investment Funds (AIFs) as of September 24, 2022. These AIFs in turn have invested ₹11,206 crore in 720 startups, the Ministry of Commerce & Industry said in a statement last week.

PayU Billdesk deal

PayU terminates $4.7 billion BillDesk acquisition