PayU, others in talks to buy MobiKwik payment gateway

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BENGALURU: South Africa’s Naspers-owned payments gateway major PayU is in talks with Gurgaon-based sector player MobiKwik to acquire its payment gateway business, three people aware of the matter said. Apart from PayU, other bidders have also held talks for the payment gateway business under Zaakpay as the 10-year-old parent company looks to shore up capital for expansion of its consumer-facing fintech business.

MobiKwik’s asking price for the business is around $100 million, but sources said this could be $50-60 million as it negotiates terms with the parties involved. At the same time, the company is also looking to raise new capital at the parent level as it positions itself as an online financial services company focusing on credit.

Pay U

“MobiKwik may put the sale of the payment gateway business on hold if the talks for a capital-raise are successful,” said one of the sources briefed on the deal. MobiKwik has already raised around $120 million from investors, including Bajaj Finance, Sequoia Capital and South Africa’s Net1.

“Multiple rounds of talks have taken place between PayU and MobiKwik. Their payment gateway business is relatively a bigger asset compared to other businesses like e-wallet or new businesses like financial services,” a person aware of the goings-on said.

Besides the payment gateway, MobiKwik has offerings like the e-wallet and financial services. Companies like Uber, Zomato, Domino’s and others use its payment gateway services. Other players in this segment in India include Paytm, BillDesk and Razorpay.

MobiKwik co-founder Upasana Taku said, “MobiKwik continues to sustain rapid growth, has diversified into financial services and, as a result, is the first Indian fintech company to break even at scale…MobiKwik and its wholly owned payment gateway subsidiary both are currently fund-raising.”
A PayU India spokesperson said, “We deny we are in discussions for an outright purchase of MobiKwik.”
As reported by TOI in September, MobiKwik was working with investment bank major Goldman Sachs to on-board a ‘strategic investor’, Taku had said. Earlier in the year, in a blog post, the firm had said it reported Rs 184 crore of gross revenue at the end of March 2019. As of September, the company had disbursed loans worth Rs 868 crore and said it will be profitable by the end of the year.
Another person aware of MobiKwik’s move said the company had previously reached out to other market players to sell its payment gateway business, but that did not work out. The company has also seen a steady churn among its senior leadership since last year, including COO Mrinal Sinha in February this year.

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