Axis Bank on Thursday said it had acquired payments wallet FreeCharge in an all-cash deal for Rs 385 crore. The purchase will help the lender enhance its digital banking services and tap into a larger customer pool.
Axis Bank on Thursday said it had acquired payments wallet FreeCharge in an all-cash deal for Rs 385 crore. The purchase will help the lender enhance its digital banking services and tap into a larger customer pool. “The whole purpose is to leverage the agile innovate culture of a start-up and combine it with the trust factor of a bank. It can be best achieved by having an independent entity,” Axis Bank MD and CEO Shikha Sharma said. Sharma added that the acquisition was a strategic fit for the bank and would help create an agile technology platform to service digital customers. “The challenge is to leverage the strength of the two organisations to do something which is uniquely different and unique in the market place,” she said. Jairam Sridharan, chief financial officer, Axis Bank, said the acquisition would help augment the bank’s digital capability and execution capacity. “You will see an instant doubling of the Axis customer base with the transaction,” Sridharan said. The lender has bought a 100% stake in FreeCharge Payment Technologies and Accelyst Solutions.
The two constitute the digital payments business of Jasper Infotech, which runs e-commerce marketplace Snapdeal.com. Axis Bank, the country’s third largest private sector bank, has around 20 million savings deposit customers while FreeCharge has more than 50 million customers. The bank has a 10% market share in the mobile banking space. “FreeCharge entrenches us in the digital payment landscape. It enhances our reach in a new customer segment which is digital, which is mobile first, which is relatively young, and it creates a platform for us to distribute our digital products and service,” Sridharan said at a press conference.
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The deal is subject to regulatory approvals and it is expected to conclude by the end of September. It is expected the acquisition would become a value creator in the next two to three years. Axis Bank said it would retain and leverage the FreeCharge brand since it has a strong resonance with the target audience. It would also retain all the 200 employees of the company. FreeCharge would most likely remain an independent entity within the bank, if the regulators approve the structure, it added.
In 2015, e-commerce marketplace Snapdeal had acquired FreeCharge for about Rs 2,400 crore, making it one of the largest deals in the consumer internet space in India at that time. Shares of Axis Bank closed at Rs 523.60 each, down 0.99% from the previous close.