India fintech clampdown helps Prosus out of a hole

Prosus' logo is pictured on a smartphone in this illustration taken, December 4, 2021. REUTERS/Dado Ruvic/Illustration

LONDON, Oct 3 (Reuters Breakingviews) - Stricter regulation has been a headache for M&A in the tech industry. But it may do Prosus (PRX.AS) Chief Executive Bob van Dijk a favour. The $106 billion Amsterdam-listed investor on Monday said it has called off its $4.7 billion acquisition of payment firm BillDesk. Although the competition watchdog in India had approved the deal, “certain conditions precedent” weren’t met by the deadline at the end of last month, Prosus said.

One reason for the move may be the Indian central bank’s decision to mandate that all digital loans will have to be credited directly to borrowers’ bank accounts rather than through digital wallets, which may hurt fintech upstarts like BillDesk. And the deal, agreed in August last year, always looked pricey. At 19 times trailing sales, Prosus was paying a big premium to BillDesk’s global rival PayPal’s (PYPL.O) 13 times multiple at the time. Given the recent market slump, Prosus can now put its cash to work at lower valuations. Better still, it could buy back more shares, given its stock is now trading at a gaping 20% discount to the net value of its assets, according to Citigroup. (By Karen Kwok)

Reuters Graphics

Follow @Breakingviews on Twitter

(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

Capital Calls - More concise insights on global finance:

Google sensibly steps away from the games console

LeBron deal dinks pickleball into big leagues read more

Chevron’s geographical transition sends bad signal read more

Italy’s loafer king can afford to be more generous read more

Beijing’s property bandage fails to staunch blood read more

Editing by Neil Unmack and Oliver Taslic

Our Standards: The Thomson Reuters Trust Principles.

Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.