Rapyd, the fintech-as-a-service startup that provides APIs to enable payments, card issuing, digital wallet and other financial services to companies like Uber and Ikea, is taking a significant step forward in its growth with a big acquisition: it is paying $610 million to acquire a giant piece of PayU — the payments group of internet giant Prosus that focuses on emerging markets.
While full financial terms of the deal are not being disclosed, Arik Shtilman, Rapyd’s CEO and co-founder, told TechCrunch that his company is “in [the] final stages of closing a new financing round of $700 million,” which points to how the deal will be financed. He also confirmed that Prosus does not become a shareholder with this acquisition.
Rapyd is currently valued at $8.75 billion and has raised more than $806 million, with its current investors including the likes of Fidelity, Dragoneer, General Catalyst and Target Global, as well fintech giant Stripe.
PayU’s operations span some 50 countries, and Prosus is not selling all of these: it is selling what it calls the “Global Payment Organisation” (GPO) and will continue to hold on to PayU’s operations in India, Turkey and Southeast Asia, arguably the three biggest regions for the business.
The deal underscores both ambitions for Rapyd — with roots in Israel but now based out of the U.S. — to build out more scale and reach globally for its wider payments operations en route to an IPO, with its fuller customer list now including Meta, Netflix, Adidas, Inditex (owner of Zara) and some 100 other major enterprise businesses.
But it also points Prosus’ efforts to streamline its operations and to cut out assets that are dragging it down. In quarterly results reported in June, Prosus said it made $903 million in consolidated revenues from its payments business, with India profitable and driving the growth rate of the overall segment. But it also said that the GPO business contributed to overall trading losses of $83 million (and Prosus’ wider business also faced issues due to problems in other operations such as BYJU’s).
The deal must still go through regulatory clearance, Rapyd said, but Shtilman added that if it does, it will stand as the largest deal so far in 2023, with the fundraise to finance it accounting for 3% of all fintech fundraising for the year.
It will also provide more fuel to Rapyd for its next steps. IPO plans are so far not specific. “Timing will be dictated by a range of factors,” Shtilman said. “Like any other company that is weighing the benefits of going public, we are looking at multiple factors including market conditions, desire of investors, and the ability to fund a specific set of future initiatives for global expansion.”
“PayU has built and scaled its GPO business successfully over a number of years. It is important to us that a company with a track record like Rapyd will take the business to the next level, expanding the GPO solutions to meet the evolving needs of the dynamic fintech landscape globally,” said Laurent le Moal, PayU’s CEO, in a statement. “I wish Rapyd every success as it continues to build its global payments platform.”
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