Key Points of PhonePe-ZestMoney Deal Cancellation:
- ZestMoney, a BNPL platform with 17 million customers and credit disbursements of Rs 400 crore per month, has faced a setback with PhonePe backing out of its acquisition deal due to due diligence concerns.
- PhonePe, which is backed by Walmart, had been negotiating to acquire ZestMoney since November 2022 to strengthen its position in digital lending.
- ZestMoney’s BNPL model involves direct purchase disbursements from lending partners to merchants, allowing customers to repay the lender in installments.
- The Reserve Bank of India’s (RBI) guidelines on digital lending made it challenging for fintech startups to offer personal credit lines via card, which impacted the deal’s value.
- The deal’s value dropped to $200-300 million from ZestMoney’s previous valuation of $470 million.
- ZestMoney has raised $50 million from Zip Co. as part of a larger Series C funding round, with current investors such as Goldman Sachs, Quona Capital, Xiaomi, and Alteria Capital expected to participate.
- PhonePe, which currently does not offer digital financing but provides other financial services such as insurance and mutual fund sales, has yet to release a statement on the issue.
Details of PhonePe-ZestMoney Deal Cancellation:
ZestMoney, a buy-now-pay-later (BNPL) platform with 17 million customers and credit disbursements of Rs 400 crore per month, has suffered a setback as PhonePe, backed by Walmart, has abandoned its acquisition deal with the company over concerns related to due diligence. Economic Times broke the news, and PhonePe has yet to release a statement on the issue.
ZestMoney’s BNPL model involves direct purchase disbursements from lending partners to merchants, enabling customers to repay the lender through installments.
PhonePe, which currently does not offer digital financing but does provide a range of other financial services such as insurance and mutual fund sales, had been negotiating to acquire ZestMoney since November 2022 in a bid to strengthen its position in digital lending.
However, following the Reserve Bank of India’s (RBI) guidelines on digital lending, which made it difficult for fintech startups to offer personal credit lines via card, the deal’s value dropped to $200-300 million from ZestMoney’s previous valuation of $470 million.
ZestMoney has raised $50 million from Zip Co., an Australian BNPL startup, as part of a larger Series C funding round in which current investors such as Goldman Sachs, Quona Capital, Xiaomi, and Alteria Capital are expected to participate.
About PhonePe:
PhonePe, a fintech company that offers digital payments and financial services, is based in Bengaluru, Karnataka, India. The company was founded in December 2015 by Sameer Nigam, Rahul Chari, and Burzin Engineer. Using the Unified Payments Interface, the PhonePe app was launched in August 2016.
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