Fintech firm PayU India raises Rs 302 crore from Prosus arm

Fintech firm PayU India has raised Rs 302 crore (approximately $35 million) from its Dutch parent Prosus, as the company intensifies efforts to make its credit business profitable by September.

According to media reports, the capital infusion came through the issuance of 4.9 crore equity shares to MIH Payments Holdings B.V., an investment entity of Prosus’ controlling group, Naspers. This follows an earlier round in which Prosus injected Rs 1,013 crore into the company via a rights issue, indicating a sustained commitment to PayU’s India operations.

“This fundraise is to fuel the growth of our credit business, which is expected to breakeven by September,” a PayU India spokesperson told Inc42. “It also reflects Prosus’ confidence in our growth trajectory and our path to profitability.”

Launched in 2011, PayU India serves as the digital payments and lending arm of Prosus. It began as a payments gateway under Ibibo and was spun out in 2014 with Nitin Gupta and Shailaz Nag among its co-founders. Today, the company operates across two major verticals—payments and digital lending—through its NBFC arm, PayU Finance.

While the payments unit, which contributes the majority of revenue, reached breakeven in the second half of FY25, the lending vertical continues to post losses despite significant growth.

According to Prosus’ annual report, PayU India posted a total revenue of $669 million in FY25, up 21% from $551 million in FY24. However, the company’s adjusted EBIT loss widened to $44 million from $32 million in the previous year.

The lending business, which provides unsecured personal loans to consumers and business loans to small and medium enterprises (SMBs), recorded a 60–63% jump in revenue to $171 million. PayU disbursed loans worth $1.1 billion in FY25, with its outstanding loan book standing at $558 million at year-end. Yet, the vertical posted a negative adjusted EBIT margin of 19%, dragged down by financial leverage and higher-than-expected losses in the consumer loan segment.

Prosus noted that PayU has since tightened its underwriting standards and is reorienting the credit business toward SMB lending and embedded finance, including checkout financing. Loans to SMBs constituted 23% of the total credit disbursed in FY25. “We have implemented strengthened underwriting practices, on the back of which the new book, originated in 2024, is performing better, underlining the business’s adaptability and long-term potential,” Prosus wrote in its annual report.

Adding momentum to PayU’s recovery was the Reserve Bank of India’s April 2024 decision to lift a 15-month embargo on merchant onboarding. The company also received final authorisation to operate as a payment aggregator in May this year.

Despite earlier plans to go public, PayU has deferred its IPO timeline yet again. In a statement last month, Prosus' chief financial officer said the company will focus over the next six to 12 months on improving the fundamentals of its business, with an IPO no longer an immediate priority.