Naspers-owned PayU buys Citrus Pay

Sequoia, an early investor in Citrus Pay, exits with good returns

Online payments firm PayU, owned by South African Internet giant Naspers, has acquired smaller rival Citrus Pay for $130 million in the largest all-cash deal India’s financial technology sector has ever seen.

The combined entity will take on Paytm and Snapdeal-owned Freecharge in the country’s fast-growing digital payments industry.

Venture capital firm Sequoia Capital, which had invested about $10 million and owned a 32 per cent stake in Citrus Pay, is estimated to have made a four-fold return on its investment. Ascent Capital, which bought an 8 per cent stake last year, earned about $12 million.

This is the biggest deal in the financial technology sector after online retailer Snapdeal acquired mobile payments firm Freecharge for an estimated $400 million. Flipkart, Amazon and Shopclues have also been buying payment firms. While Flipkart has acquired PhonePe, FX Mart and NGPay, Amazon bought Amvantge and Shopclues bought Momoe.

The acquisition of Citrus Pay will help PayU reach a combined transaction value of $4.2 billion in 2016 and 150 million transactions. The deal slated to close in this quarter will also help PayU bring more financial services to its customers.

The transaction will see Amrish Rau, current managing director of Citrus Pay, become chief executive officer (CEO) of PayU in India. He will report to PayU’s global CEO Laurent le Moal. Citrus Pay co-founder Jitendra Gupta and PayU co-founder Shailaz Nag will also take up roles at PayU in India, working on the company’s foray into lending and forming alliances with banks.

“I’m delighted that Amrish Rau, Shailaz Nag and Jitendra Gupta will lead PayU in India and unite our future strategy. Everyone at Citrus Pay and PayU is driven by an entrepreneurial passion to increase access to financial services in emerging markets,” said le Moal in a statement.

Nitin Gupta, co-founder of PayU, will quit the company to start his own venture.

PayU will gain access to Citrus Pay’s e-commerce customers in telecom and aviation, for which it provides payment gateway services. The company also plans to continue building Citrus Pay’s consumer-facing products LazyPay and Sellfie.