South African Naspers' PayU buys rival Citrus Pay for $130 million

Online payment service provider PayU, owned by South Africa's Naspers Group, has bought rival Citrus Pay in a $130 million (about Rs 870 crore) deal. The deal, which will see Citrus Pay become part of PayU's Indian operation, is the largest ever M&A cash deal in Indian fintech segment.

"The deal will grow PayU India customers to more than 30 million, processing a forecasted 150 million transactions in 2016 worth a combined $4.2 billion, growing at over 50 per cent year-on-year," PayU said in a statement.

The agreement is due to close in the third quarter of 2016. The combined entity will compete with players like Paytm and Snapdeal-owned Freecharge. Amrish Rau, currently Citrus Pay managing director, will become CEO of PayU in India.

Reporting to PayU Global CEO, Laurent le Moal, he will lead the management team across PayU and Citrus Pay. Citrus Pay founder Jitendra Gupta will drive PayU's Fintech foray into credit through Citrus Pay's Lazypay, while PayU cofounder Shailaz Nag will focus on new areas of growth through bank alliances.

Nitin Gupta (PayU cofounder) will help complete the transition to the new leadership team before departing PayU to pursue his entrepreneurial ambitions, the statement said. According to a Boston Consulting Group report, digital transactions are estimated to hit $500 billion by 2020, ten times its current level.

"The announcement is a significant milestone for both businesses, as well as the fintech industry in India. It is exciting for everyone across the PayU and Citrus teams as we bring together new capabilities that will help us to better serve our collective clients," PayU CEO Laurent le Moal said.

Citrus Pay was founded in 2011 by Jitendra Gupta. It has become one of the fastest growing Indian fintech companies.

Following completion of the deal, Citrus Pay will be wholly owned by Naspers, strengthening its payments division. The deal is also expected to give an attractive exit to Citrus Pay investors, including Beenos and Sequoia Capital. Investec acted as the sole advisor to the transaction.