PayU India’s valuation estimated at $2.5 billion: Citi reportPayU India, the subsidiary of Netherlands-based PayU, accounts for more than half the overall business of the Naspers-backed financial firm, according to Naspers’ half-yearly financial statement.

On an overall basis, this could value PayU India at more than $2.5 billion since a report released in September had calculated Naspers’ payments business at around $5.2 billion.

“PayU, our payments business, recorded strong growth in its (payment service provider) business. A 35% increase in the number of transactions processed, to over 400 million, generated total payment transaction value exceeding $14 billion – with India accounting for more than half,” said Naspers in its half-yearly report for financial year 2019 released recently.

Revenue from the payments business grew 36% to $171 million, the report said.

A Citi research report on Naspers, which is a listed entity, highlighted that its investments in emerging markets will pay off handsomely as countries like India embark on rapid digitisation.

“Based on the margins being delivered by the more mature payment companies we assume that a 30% margin could be sustainable longer term for Naspers payments… the implied valuation is $5.2 billion,” said the Citi research report.

Citing two major reasons for growth of smartphones and internet in emerging economies and increase in e-commerce, Citi said that online payments will rapidly grow in India. The share of e-commerce is predicted to increase to 21% from about 12%, at an annual growth rate of 28%.

“We have seen tremendous growth in e-commerce transactions and now have more than 50% market share. With LazyPay credit product we are developing a full-stack play and this is driving the growth in revenue. We achieved revenue of $100 million in India,” said PayU India CEO Amrish Rau.

The Citi report highlighted that PayU provides a payment platform to more than 3,00,000 merchants in India, with its main verticals being airlines and e-commerce. Further, with estimates stating that $500 billion will flow digitally in India in 2020, merchant payment companies like PayU have a huge opportunity to grow.

Rau, who had joined PayU after the Citrus acquisition, said that over the past two years the company has seen rapid growth in the payments business and has accelerated its credit business as well through LazyPay.

“LazyPay gained significant traction, reaching over 4,50,000 consumers and issuing more than $4 million in loans per month. Our Indian credit-portfolio companies also continued to perform ahead of plan, with our minority investments PaySense and ZestMoney each issuing over $7 million in loans per month, a significant acceleration year-on-year,” said the Naspers filings.

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