M&A deals booming in Indian payments sector

Consolidation boom has gathered momentum in India's payment sector with 15 M&A deals worth $340.15 million signed in 2016-17, News Corp VCCEdge report said on Tuesday.

This year has seen a good start as well with three deals signed already. While one deal was worth $88 million, the value of other two was not disclosed.

Key M&A deals in payments space include PayU Payments' acquisition of Citrus Payment Solutions for $130 million and E-Billing Solutions' acquisition of Techprocess Payment Services deal worth $88 million.

In term of private equity (PE) investments, however, 2016 witnessed 14 deals worth $177.23 million, a decline of 60.36 per cent over the previous year. In terms of number of deals the decline was 51.72 per cent.

"The year 2015 marked a period of buoyancy with a huge amount of funds flowing into the payments space. Invariably, high growth spikes are followed by periods of consolidation," Gaurav Roy Business Head VCCEdge News Corp VCCircle said. The payments space was no different, he added.

With investors being able to gauge overall market sentiment, funding moved to mature organisations rather than those in the seed stages, he said.

Roy further said: "Demonetisation gave a definite push to the sector, creating a plethora of opportunities for young entrepreneurs. As News Corp VCCEdge data reveals, 2017 will now be remembered as a year when a certain sense of maturity announced its arrival in the payments space."

Kalaari Capital's $3.59 million in Airpay Payments Services & Kstart Capital & Venture Highway's $0.67 million in Delvit Solutions key deals for 2017.

Startups in payments space have received funding worth $159.71 million over 68 deals since 2012. Around $81.93 million of this has been series B, $58.47 million has been series A while $19.31 million has been angel/seed, the report said.