PhonePe calls off ZestMoney deal over valuation, NPA issues in due diligence
The deal, which was poised to fetch between $200-$300 million, has hit a snag in the latter stages of due diligence.
- Mar 30, 2023,
- Updated Mar 30, 2023 3:50 PM IST
Walmart-owned fintech firm PhonePe has decided to halt its proposed acquisition of ZestMoney, a Bengaluru-based buy now pay later (BNPL) platform, according to two people with knowledge of the matter.
The deal, which was poised to fetch between $200-$300 million, has hit a snag in the latter stages of due diligence as the parties involved were unable to come to terms on the valuation, and other issues, such as high default rate or non-performing assets (about 10-12 per cent), surfaced during the process. As a result, the deal stands abandoned at the moment, sources told Business Today. The discussed valuation was a far cry from the $450 million ZestMoney earned during last funding round in September 2021.
The collapse of this deal is expected to have a huge impact on ZestMoney which has not raised a new venture round since September 2021 and was scouting for potential suitors before PhonePe entered the ring.
Queries sent to PhonePe and ZestMoney did not elicit a response till the time of publishing this report. The development was first reported by The Economic Times.
ZestMoney has raised approximately $140 million so far from a host of investors including Goldman Sachs, PayU, Flourish Ventures, Zip Co Limited, Accion Quona Fund, Collie Capital, Ribbit Capital, Thorney Opportunities, and ON Mauritius.
Founded by Lizzie Chapman, Priya Sharma and Ashish Anantharaman in 2016, ZestMoney operates an EMI and Pay Later network. ZestMoney disburses the funds directly to the merchant from its lending partner, allowing customers to repay the lender in smaller installments over time instead of paying the full purchase amount upfront.
ZestMoney is integrated with e-commerce platforms such as Amazon, Flipkart, Myntra, MakeMyTrip and Nykaa, and is live at 85,000 retail touchpoints across India. As per the company, about 70 per cent of its customers are from tier II and III markets.
Post its full separation from Flipkart in December, Bengaluru-based PhonePe has been in conversations with ZestMoney for about six months to explore the latter’s digital lending capabilities. The acquisition was seen as a strategic move to expand PhonePe's offerings in the digital lending and BNPL space, which has seen significant growth in recent years in India.
The company recently said it will use its ongoing $1 billion fundraise to build and scale new businesses including lending. Since its separation from Flipkart, PhonePe has raised $650 million from several global investors including General Atlantic, Ribbit Capital, Tiger Global, TVS Capital Funds and parent firm Walmart. The ongoing round values the company at $12 billion, making it the most valued (privately-held) fintech firm in the country.
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Walmart-owned fintech firm PhonePe has decided to halt its proposed acquisition of ZestMoney, a Bengaluru-based buy now pay later (BNPL) platform, according to two people with knowledge of the matter.
The deal, which was poised to fetch between $200-$300 million, has hit a snag in the latter stages of due diligence as the parties involved were unable to come to terms on the valuation, and other issues, such as high default rate or non-performing assets (about 10-12 per cent), surfaced during the process. As a result, the deal stands abandoned at the moment, sources told Business Today. The discussed valuation was a far cry from the $450 million ZestMoney earned during last funding round in September 2021.
The collapse of this deal is expected to have a huge impact on ZestMoney which has not raised a new venture round since September 2021 and was scouting for potential suitors before PhonePe entered the ring.
Queries sent to PhonePe and ZestMoney did not elicit a response till the time of publishing this report. The development was first reported by The Economic Times.
ZestMoney has raised approximately $140 million so far from a host of investors including Goldman Sachs, PayU, Flourish Ventures, Zip Co Limited, Accion Quona Fund, Collie Capital, Ribbit Capital, Thorney Opportunities, and ON Mauritius.
Founded by Lizzie Chapman, Priya Sharma and Ashish Anantharaman in 2016, ZestMoney operates an EMI and Pay Later network. ZestMoney disburses the funds directly to the merchant from its lending partner, allowing customers to repay the lender in smaller installments over time instead of paying the full purchase amount upfront.
ZestMoney is integrated with e-commerce platforms such as Amazon, Flipkart, Myntra, MakeMyTrip and Nykaa, and is live at 85,000 retail touchpoints across India. As per the company, about 70 per cent of its customers are from tier II and III markets.
Post its full separation from Flipkart in December, Bengaluru-based PhonePe has been in conversations with ZestMoney for about six months to explore the latter’s digital lending capabilities. The acquisition was seen as a strategic move to expand PhonePe's offerings in the digital lending and BNPL space, which has seen significant growth in recent years in India.
The company recently said it will use its ongoing $1 billion fundraise to build and scale new businesses including lending. Since its separation from Flipkart, PhonePe has raised $650 million from several global investors including General Atlantic, Ribbit Capital, Tiger Global, TVS Capital Funds and parent firm Walmart. The ongoing round values the company at $12 billion, making it the most valued (privately-held) fintech firm in the country.
Also read: E-commerce unicorn Meesho crosses 1 million registered sellers
Also WATCH | Jhulan Goswami, Jemimah Rodriguez, Harleen Deol talk WPL, good teams, dressing room tete-a-tete at BT MPW
Also read: Akshay Kumar, Good Glamm Group JV to launch personal care, wellness products for men
Also WATCH | Ashneer Grover’s Third Unicorn is finally live! Here’s all you need to know about CrickPe