Japan-based consumer finance service Paidy agreed yesterday to be acquired by one of its shareholders, digital payment processor PayPal, for about $2.7bn.
Founded in 2008, Paidy provides a buy-now-pay-later service that allows customers to make instant credit purchases that can be paid back on a monthly basis. PayPal will use the acquisition to strengthen its capabilities and presence in the domestic payments market in Japan.
Peter Kenevan, head of Japan for PayPal, said: “Combining Paidy’s brand, capabilities and talented team with PayPal’s expertise, resources and global scale will create a strong foundation to accelerate our momentum in this strategically important market.”
Following the close of the deal in the fourth quarter of 2021, Paidy will continue to operate under the leadership of founder and executive chairman Russell Cummer and president and CEO Riku Sugie.
The company had raised $585m of overall financing prior to the acquisition announcement, including $337m of equity funding.
Paidy had collected $120m in series D funding from JS Capital Management, Soros Capital Management, Tybourne Capital Management and Wellington Management in April this year. It included a $182m debt facility from financial institutions such as Goldman Sachs and Sumitomo Mitsui Bank.
In April 2020, trading firm Itochu added a $48m extension to Paidy’s series C debt and equity round, following a $143m first close in November 2019.
The $83m equity portion of the series C round was supplied by Itochu, payment services provider Visa and PayPal’s corporate venturing unit, PayPal Ventures, in addition to Goldman Sachs, JS Capital Management, Soros Capital Management and Tybourne Capital Management.
Itochu also contributed to a $15m series B round for the company in 2016 that included SIG Asia, SBI Investment and Eight Roads Ventures, representing quantitative trading firm Susquehanna International Group, financial services firm SBI and investment and financial services group Fidelity respectively.
Arbor Ventures also backed the 2016 round. Paidy had raised $8.3m in a 2015 series A round featuring CyberAgent Ventures and Recruit Strategic Partners – investment vehicles for internet company CyberAgent and human resources firm Recruit – as well as SIG Asia, Arbor Ventures, MS Capital, 500 Startups and Cherubic Ventures.