PayU India Secures ₹302 Crore Investment to Boost Credit Operations

Fintech giant PayU India has successfully raised ₹302 crores (approximately $35 million) from its parent company, Prosus. This investment is pivotal as PayU intensifies its efforts to achieve profitability in its credit services by September.

Details of the Recent Investment

The capital infusion resulted from the issuance of 4.9% equity stakes to Mih Payments BV Holdings, an investment arm of the Prosus-controlled Naspers Group. This follows a previous funding round where ₹1,013 crores was injected, showcasing a solid commitment from Prosus to PayU’s Indian operations.

Growth Strategy and Confidence in Profitability

A spokesperson for PayU India stated, “This fundraising aims to fuel the expansion of our credit activity, which we expect to turn profitable by September. It also reflects the confidence of Prosus in our growth trajectory and our path to profitability.”

Overview of PayU India’s Operations

Founded in 2011, PayU India serves as a digital payments platform and has evolved significantly since its inception. Originally launched as a payment gateway under the Ibibo umbrella, the company was co-founded by Nitin Gupta and Shaillaz Nag in 2014. Today, it operates across two primary sectors: payment processing and digital loans through its NBFC arm, PayU Finance.

Financial Performance and Growth Metrics

PayU India’s payment division, which constitutes the bulk of the company’s revenue, achieved profitability in the latter half of FY25. While the digital loans segment has experienced substantial growth, it continues to navigate challenges. According to the latest annual report from Prosus, PayU India reported total revenues of $669 million in FY25, marking a 21% increase from the $551 million recorded in FY4. However, adjusted EBITDA losses widened to $44 million from $32 million.

Revamping Credit Activity and Loan Disbursements

The company’s loan activities, which offer unsecured personal loans to consumers and loans for small and medium-sized enterprises (SMEs), have seen an impressive growth rate of 60 to 63%. PayU disbursed loans worth $1.1 billion in FY25, with an outstanding loan book of $558 million at year-end. Despite the growth, the loans segment reported a negative adjusted EBITDA margin of 19%, attributed to financing leverage and higher-than-expected losses in consumer loans.

Positive Changes in Lending Practices

Prosus has pointed out that PayU has tightened its credit underwriting standards, now focusing more on SME loans and integrated financial services. During FY25, SME loans accounted for 23% of the total credit disbursed. “We have adopted reinforced subscription practices, and the new loan book since 2024 reflects improved performance, demonstrating the adaptability of our business model and long-term potential,” noted Prosus in its report.

Future Prospects and IPO Plans

Adding to the momentum, the Reserve Bank of India lifted a 15-month ban on merchant onboarding in April 2024, further supporting PayU’s growth. The company also secured final approval to operate as a payment aggregator in May. Despite initial plans for an IPO, PayU has decided to postpone these ambitions, focusing instead on enhancing core business operations over the next six to twelve months, as articulated by Prosus’s financial director.