TA Associates Acquires Minority Stake In BillDesk

Private equity investor TA Associates has acquired a minority stake in e-payment processing services provider BillDesk (part of IndiaIdeas.com Ltd) for an undisclosed amount. BillDesk offers online payment services for utility bills, credit card, depository account charges and ISP charges. It is part of IndiaIdeas.com Ltd, founded in early 2000 by three ex-Arthur Andersen professionals.

Terms of the deal were not disclosed but sources told Techcircle.in the deal involves secondary purchase of shares from one of the existing investors in the company who has exited the firm. Financial investors in BillDesk include Clearstone Venture Partners, SBI besides early investors in the company Bank of Baroda and National Venture Fund For Software & IT Industry. It could not be immediately ascertained from which investor TA Associates acquired the shares. Clearstone had invested $5 million in 2006.

Khaitan & Co and Goodwin Procter LLP provided legal counsel to TA Associates. AZB & Partners served as legal counsel to BillDesk.

Dhiraj Poddar, director, TA Associates Advisory Pvt Ltd has joined the company's board of directors as part of the deal. Talking about the investment rationale, Poddar said, "BillDesk has enjoyed significant growth and strong financial performance. The company has a skilled management team and is executing on a sound business plan."

"With their wealth of experience investing in the financial technology sector globally, as well as their significant resources, we anticipate a successful business partnership with TA," said MN Srinivasu, co-founder and director, BillDesk.

As of August 2011, the company had 45 banks and financial institutions as its clients, as well as 250-300 large billers (all major telecom operators), around 20 electricity companies, 30 insurance firms, key travel companies and large, pure play e-commerce platforms.

In mid-2011, there were rumours that global financial services company American Express was in talks with BillDesk to acquire a majority stake in the company. These were later rubbished by BillDesk's Srinivasu who told Techcircle.in there were no such plans and Amex was just a client.

For TA Associates, this would be its fifth investment in the country. Its average ticket size in India ranges between $45 million and $125 million. The Boston-headquartered private equity firm, which globally manages more than $16 billion in capital, has been operating in a mid-market deal-making space in India.

TA Associates had invested $45 million in Micromax in 2009 and also bought stake in the diagnostics chain Dr Lal PathLabs in a secondary deal. The stake was bought from Sequoia Capital. Most recently, it invested $40 million for an undisclosed stake in privately owned Tega Industries, a manufacturer of consumables for the mining industry.

Last year, the PE firm exited its five-year-old pre-IPO investment in telecom firm Idea Cellular through share sales in the open market. TA Associates made around 2x returns on its investment of Rs 450 crore (approx.), according to VCCircle estimates.

Earlier, in an exclusive video interview with VCCircle, Naveen Wadhera, country head– India and director, TA Associates Advisory Pvt Ltd had mentioned that business services, financial services, healthcare and consumer would be the key focus areas for TA Associates in India.

"While India is today dominated by paper-based transactions, electronic transactions are quickly gaining favor. There is growing acceptance of online payments by retail consumers and the very large Indian market, with its low but rapidly increasing online penetration, should continue to present significant growth opportunities for BillDesk," said Wadhera.

Other key players in this space include mChek, Itz Cash Card and Prizm Payments, among others.

Last August, venture capital firm Sequoia Capital had invested $8 million in Chennai-based Prizm Payment Services, taking its total commitment in the electronic payment service provider to $15 million.