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Fintech subsidiary PayU buys majority share in Singapore-based Red Dot Payment

2019-07-29 17:43 Monday


South Africa-based technology giant Naspers is set to further expand its business into Asia after it recently announced that its fintech subsidiary PayU will acquire a majority stake in Singapore startup Red Dot Payment (RDP).

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Naspers already specializes in developing markets in India, Latin America, Africa and Eastern Europe — but is now officially adding SE Asia and its 600 million consumers to its line-up.

The region is one of the fastest growing digital payments markets in the world, and is expected to triple in size to US$240bn in total payments volumes by 2025, according to experts.

The deal by Naspers, which holds a 31% stake in Chinese internet group Tencent, values Red Dot Payment at US$65 million. Red Dot is 8 years old and offers services including e-commerce storefronts, a payment gateway and online invoicing.  The actual size of the holding is not being released at this point, but PayU says it has acquired a majority stake.

“We've got to strike the balance between a solid majority [acquisition] and an opportunity [for the founders]”, said PayU CEO Laurent le Moal in an interview.

PayU has also revealed its intentions to put “real investment” into RDP, while also integrating its services and tech into the so-called PayU Hub – a product stack that is used by a host of business partners around the world. The Hub itself was acquired as part of an earlier takeover deal with Israel's Zooz.

In just one country alone, India, PayU's business is estimated to be worth around US$2.5 billion.

Speaking after the announcement, Randy Tan, CEO and founder of RDP, described the deal as “a marriage made in heaven”. He noted that RDP had already turned down some offers from several other high-profile players.

“[PayU] operates globally and has over 300,000 merchants, including Google, Facebook and the kind of clients we aspire to win,” Tan explained.

According to le Moal, the move, allows PayU to get another step toward its biggest goal when it comes to flourishing in developing markets.

“We want to build the No.1 payments company for high-growth markets,” le Moal added. “If you look at what the top ten economies will be in 2030, half are in SE Asia and the rest are growth markets we are already in. It is fundamental to want to go where the consumer growth is.” he added.

In 2018, RDP entered the market in Africa after inking a memorandum of understanding with Finserve Africa, a Kenyan mobile virtual network operator. The agreement involved partnering on alternative digital wallet payment methods such as WeChat and Alipay in Kenya. It was announced as part of Enterprise Singapore's push to help local companies enter the African continent.

Naspers said the latest deal has brought PayU's total investments in fintech, including mergers and acquisitions, to over US$700m in the past 3 years.

Last month, PayU also agreed to buy Turkish digital payments company Iyzico for US$165m in its biggest fintech acquisition so far.

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