Prosus, PayU create new digital lending firm in India
Naspers-owned fintech firm, PayU, has taken a controlling stake in PaySense, an Indian digital lending firm, in a multimillion-dollar transaction to create a new credit unit.
The company says the deal is valued at $185 million and PayU also plans to inject a further $200 million equity capital; $65 million of the total amount will be invested immediately, with the balance to be invested over the next 24 months.
PayU entered the credit space in India with the creation of LazyPay in 2017. The company says LazyPay is a significant player in the “pay later” and the microcredit space in India.
According to the company, last year LazyPay helped more than 1.2 million unique borrowers and facilitated more than 42 million credit transactions.
“More than 250 merchants now offer LazyPay at their checkouts. LazyPay uses technology to offer credit at the point of purchase which may not otherwise be available to customers,” it says in a statement.
Similarly, PaySense enables consumers to secure long-term credit for financing their new vehicle purchases and other expenses.
“Some of its offerings overlap with those of LazyPay, which primarily focuses on providing short-term credit to consumers to facilitate orders on food delivery platforms, e-commerce Web sites and other services,” it says.
Naspers’s international Internet assets division, Prosus, on Friday told shareholders that the two entities, both pioneers in the use of alternative data to make lending decisions, will create a new digital lending leader that can help more of the new-to-credit Indian population.
According to the statement, PaySense offers personal loans in 43 major cities in India and has issued over 120 000 loans to over 75 000 unique borrowers, using alternative data to underwrite credit.
“It provides a mobile-first digital personal loan product. PayU is an existing shareholder, having participated in PaySense’s Series A and B funding rounds,” reads the statement.
Additionally, it says Prashanth Ranganathan, PaySense CEO, will become CEO of the combined business, PayU Credit.
The company says: “The merger will accelerate PayU’s vision of creating an Indian fintech ecosystem that can serve more of the new-to-credit Indian population. The unified digital credit platform will 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.”
Prosus added the transaction reinforces its long-term commitment to India, having invested close to $5 billion in its Indian operations and partner companies over the past five years.
“In addition to the investments in the payments and fintech sector, Prosus has invested in technology-led companies focused on food delivery, education, e-commerce and travel, among other things,” it said.
Commenting on the transaction, Laurent le Moal, CEO of PayU, said: “Technology has the power to completely transform people’s access to financial services, and the credit market in India is poised for further digital disruption. This merger will accelerate PayU’s vision of a flourishing alternative credit ecosystem in India.
“We're excited about the opportunity to integrate with this fast-growing business and build a full-stack digital lending platform that will enable us to unlock credit and financial services to millions of underserved consumers. This is our biggest opportunity yet to truly democratise credit in India."