Dutch investment firm Prosus, controlled by South Africa's Naspers, has gained over $2 billion from Swiggy's IPO, despite weak market sentiment. This has prompted Prosus to consider a potential IPO for its India-focused fintech subsidiary, PayU.
Initially, Prosus aimed for a valuation of $5-7 billion for PayU's IPO this year, but Chief Investment Officer Ervin Tu suggests a 2025 event. The timeline for PayU's IPO may change in 2024.
PayU, a Netherlands-based fintech company, has established a significant presence in India's digital payments and lending sector.
Despite facing competition from rivals like Razorpay and PhonePe, which are supported by Tiger Global and Walmart, PayU has carved out a niche by offering payment solutions and lending services for consumers and small businesses.
A recent UBS report raised its valuation to $4.2 billion. PayU faced a 15-month regulatory ban that prevented it from acquiring new merchants, but resumed growth earlier this year after receiving approval from the Reserve Bank of India to operate as a payment aggregator and expand its merchant network.
India's digital payments sector has seen explosive growth in recent years, with an annual growth of 44% in retail digital transactions in FY24.
Prosus, an investment firm, views India as a key market, with its portfolio including Indian startups like Meesho and Urban Company.
Prosus has acquired a 31% stake in Swiggy. PayU, a company owned by the Naspers Group, has a presence in 17 countries and is gearing up for a public listing. FY24 saw a 11% annual growth in revenue, amounting to $444 million.
The firm is working with financial advisers, including Goldman Sachs, to prepare for the IPO, expected to file its Draft Red Herring Prospectus (DRHP) early next year, with the IPO likely raising at least $500 million.
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