PayU, a fintech and payments arm of Prosus NV, announced an agreement to merge its LazyPay consumer lending arm with Indian digital credit platform PaySense. The valuation is $185 million, according to a company press release.

PayU said it would inject another $200 million of equity into the merged company, with $65 million to be invested immediately, with the remaining funds invested over a period of 24 months. 

"Technology has the power to completely transform people’s access to financial services and the credit market in India is ripe for digital disruption,” Siddhartha Jajodia, global head of credit at PayU, said in the release. "This merger is the next step in our journey as we accelerate our vision for credit in India."

Prashanth Ranganathan, the chief executive officer of Paysense, will continue to lead the combined business and retain a stake in the new entity, while all other investors and shareholders will exit the business.