BillDesk's $4.7B exit to Prosus auto-terminated, stranding a shelved IPO

BillDesk, the 20-year-old Indian payments processor that powers payments for most Indian government departments, agreed in 2021 to an all-cash $4.7 billion sale to Prosus, the Amsterdam-listed investor that already owned rival processor PayU. The deal - set to be Prosus' largest ever and India's second-largest consumer internet M&A - would have paid its three consultant-founders about $500 million each and returned over $3 billion to backers including Visa, Temasek, General Atlantic and several Indian banks.

Before the Prosus deal, BillDesk had been internally planning an initial public offering. Instead it waited on the acquisition, which required conditions precedent to be fulfilled by a September 30, 2022 long stop date. Indian antitrust approval arrived a month before the deadline, but on October 3, 2022 Prosus announced that 'certain conditions precedent were not fulfilled' - without identifying them - and that the agreement had terminated automatically in accordance with its terms. There was no termination fee.

Two people familiar with the matter told TechCrunch that Prosus believed India's payments market had shown cracks and did not wish to honor a deal struck at the peak of the bull cycle. Prosus shares barely moved on the news, signaling investors did not think losing BillDesk would hurt. BillDesk founders and many investors were caught by surprise, and several fintech founders wondered publicly what aspect had broken India's biggest payments deal.

A $4.7B payday vanished: founders would have netted about $500M each and investors over $3B in India's second-biggest consumer internet deal

BillDesk swapped a planned IPO for a single-buyer cash exit priced at the top of the 2021 bull market.

The agreement auto-terminated on a fixed long stop date, leaving no room to renegotiate once the market turned.

Prosus had lost more than half its market cap since early 2021 and was selling down stakes including Tencent, making a $4.7B all-cash payout unattractive to honor.

Prosus did not name the unmet conditions, so the sell-side had no way to answer the one question the market asked.

Tying your only exit to one buyer's long stop date trades a market-listing option for a deadline you do not control.

Prosus said it 'remains committed to the Indian market' and walked away without a termination fee, its shares largely unchanged. BillDesk, valued at $1.59 billion after its January 2019 round after raising $245 million to date, was left without the exit its IPO plans had been shelved for.