PhonePe is going to acquire ZestMoney, according to reports
- ByStartupStory | November 25, 2022
PhonePe is in talks to acquire lending platform ZestMoney according to reports by various sources. This move will mark the Unified Payments Interface (UPI) leader’s foray into digital lending ahead of its fundraising plans. ZestMoney is known for facilitating Buy Now Pay Later (BNPL) loans by disbursing the purchase amount from the lending partner directly to the merchant which allows the customer to repay the money to the lender in installments.
This move from PhonePe comes after already entering the mutual fund distribution, insurance, digital gold and silver. A leader in digital payments services PhonePe is looking forward to diversify their portfolio by entering into money lending. PhonePe’s rivals Paytm and BharatPe have entered the lending space through both, merchant and consumer lending. In October, Paytm said that it posted an increase of nearly five times or 387 percent in loan disbursements in October to Rs 3,056 crore from the year ago period. The number of loans distributed by Paytm grew nearly three times or 161 percent to 3.4 million.
Backed by investors like Australia’s Zip, Goldman Sachs, Quona Capital, Xiaomi and Alteria Capital, ZestMoney had last raised $50 million in September 2021, which the company had topped with an additional $20 million raise as part of its Series C round. The round valued the company at $470 million.
Founded in 2016 by Lizzie Chapman, Priya Sharma and Ashish Anantharaman, ZestMoney has a total customer base of 17 million and enables loan disbursals of Rs 400 crore per month. The company has 27 lending partners and merchant partnerships with 10,000 online brands and 75,000 offline stores. Amidst the funding winter which has seen valuations dwindling as investors reassessed investments, the amount at which the deal will be closed is yet to be ascertained. In the past year, PhonePe acquired GigIndia, WealthDesk, OpenQ and closed the long pending acquisition of IndusOS. As per filings accessed through Tofler, ZestMoney’s loss in FY22 surged 216 percent to Rs 398 crore from Rs 125.8 crore in previous fiscal year. Revenues grew by 62 percent from Rs 89.3 crore in FY21 to Rs 145 crore in FY22.
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