This article is part of Inc42’s Year-End Stories for 2017 where we’ll highlight the major developments, Indian startup acquisitions from 2017 and their impact on the Indian startups and the ecosystems. Find all the stories of this series here.

In 2017, the Indian startup ecosystem witnessed a large number of startup acquisitions. Some were on the radar, while some were entirely unexpected. However, there were few startup acquisitions which not only caught the eyes but also took the entire ecosystem by surprise.

Interestingly, the deal that made the maximum noise was the one which never happened even after months of speculations and even after the term being sheet signed. That was the Flipkart-Snapdeal merger, which extended for six months from April-September 2017 and yet nothing came out of it.

One of the most talked about acquisition which occurred in Indian startup ecosystem in 2017 was Flipkart’s acquisition of eBay India in April 2017. Through the acquisition, Flipkart was able to add one more weapon to its arsenal, which already includes Myntra and Jabong. Not only this, global ecommerce company eBay managed to exchange its loss-making Indian entity with a 5.4% stake in the rapidly growing Indian unicorn, thereby giving a firm base to its otherwise sinking ship in the Indian ecommerce.

And how can we not talk about the major sensation of 2017 made by Google. Another most talked about startup acquisitions of 2017 was Internet giant Google acquiring four months old Indian startup Halli Labs, based out of Bengaluru. This marked the very first startup acquisition made by Google in India. The startup acquisition has allowed Google to utilise Halli Labs’ advanced AI and ML (Machine Learning) technologies to upgrade older domains and platforms for better performance.

It has now become a part of Google’s Next Billion Users initiative, which is aimed at expanding the search engine giant’s user base by tapping into up-and-coming markets like India.

Overall, the sentiments surrounding the startup acquisitions in Indian startup ecosystem were on the positive side. This could be because, after the 2016 funding winter prompted 1000+ shutdowns, investors have been cautiously trying to make timely exits from their bets in 2017.

Against a total 155 Indian startup acquisitions in 2016, the Indian startup ecosystem observed around 123 startup acquisitions until November 2017, as per Inc42 Data Labs. Thus showcasing a little fall in the startup acquisitions in the Indian startup ecosystem.

indian startup acquisition
As we are about to step into 2018, let’s take in a break down of biggest Indian startup acquisitions of 2017 which gathered a lot of headlines!

“US-headquartered Ebix Inc acquires Indian payments firm Itzcash for $123 Mn against 80% stake.” I still remember the evening I received this news and a hundred questions raced through my mind.

One of the early movers in the Indian digital payment space, Itzcash had been consistently growing at a CAGR of 60% for the last three years on all business metrics of volumes, revenues and margins. It also claimed to be the largest non-bank PPI (prepaid payment instrument) in the country to have crossed the $2 Bn mark on a card-base of 110 Mn.

With a distribution network of 75,000+ physical retail outlets, a transaction success rate of 99% for approximately $2.16 Bn (INR 14,000 Cr) in payment volume, 600K transactions per day, this Indian startup acquisition by Ebix was certainly one of the biggest deal of the year.

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Naveen Surya, the founder of Itzcash gave a crystal-like clarity on his decision to choose the path of consolidation at a time of growth. In an earlier interaction with Inc42, he shared, “Digital convergence has been the base for us in the last 10 years. Going ahead, in our quest to drive financial service convergence, it all became clear and drive us to bring in a platform to meet a consumer’s financial needs in a PHYgital manner.”

He further added, “With Ebix’s $100 Bn portfolio, we realised that, with their global presence, would also afford us a chance to start expanding and participating globally. It may be a slightly long-term play but let’s say we do a payment service for some of their clients globally, say even 10% of the $100 Bn, it is a huge opportunity.”

As told by the company spokesperson, with this infusion, the company’s early backers Matrix Partners, Lightspeed Venture Partners and Intel Capital exited, clocking returns between 3X-5X. However, Essel Group, who prior to the deal was the largest stakeholder in the firm, still holds 20% stake in ItzCash.

Hence, starting from the idea of a comfortable exit for Itzcash’s investors, it became a $123 Mn (INR 800 Cr) deal, giving ItzCash a total enterprise value of approximately $150 Mn.

What Happened After The Startup Acquisition?
Post acquisition, Itzcash has been rebranded to EbixCash. Also, the founder and Managing Director of the firm, Naveen Surya quit the company with plans to start another of his own venture. But it appears that he has joined a new Indian venture of New-Zealand businessman Richard Chandler’s Clermont Group.

Further, being bullish on EbixCash, Ebix Inc made two more startup acquisitions. The company acquired YouFirstMoney Express, Via.com as well as acquired the MTSS assets of Uttar Pradesh-based Wall Street Finance Ltd for $7.4 Mn in order to bolster opportunities for its Indian subsidiary. For instance, the acquisition of Via will offer significant cross-selling opportunities for EbixCash Financial Exchange portfolio of products.

With the new investment by Ebix, EbixCash is further looking to foray into areas such as credit, insurance, healthcare, and investments to accelerate growth momentum going forward. In lines with this, the company also recently formed a joint venture with Bombay Stock Exchange.