In a fire sale, DMI Group purchases BNPL startup ZestMoney

In a fire sale, DMI Group purchases BNPL startup ZestMoney

In a fire sale, DMI Group purchases BNPL startup ZestMoney

Zestmoney was being chased by DMI Finance. Hero Fincorp, Piramal, and Aditya Birla Finance were also in the running but withdrew due to increased risk.

ZestMoney is bought by DMI Group Non-banking finance business (NBFC) DMI Finance announced on January 17 that it had acquired the ailing buy now pay later startup ZestMoney via a fire sale.

"DMI Group's acquisition of ZestMoney opens up novel avenues for seamless checkout finance tools as well as reinforces the company's dedication to customer-centric financial solutions," the DMI Group said on LinkedIn.

On January 12, Moneycontrol was the first to disclose that DMI was probably going to seal the fire sale agreement.

Zestmoney was being chased by DMI Finance. According to a source who asked to remain anonymous, Aditya Birla Finance, Piramal, and Hero Fincorp—three other contenders—had withdrew due to excessive risk. The ZestMoney transaction is estimated to be valued between Rs 700 and Rs 800 crore. Was.

The Unified Payments Interface (UPI) leader, PhonePe, was in discussions to purchase ZestMoney in November 2022. This would have been PhonePe's foray into the digital lending market. The anticipated value of the sale was between $200 and $300 million, according to reports.

But in March, Decacorn, a fintech sponsored by Walmart, pulled out of the agreement, claiming problems with the due diligence, throwing Zestmoney into disarray.

Without PhonePe's help, ZestMoney ran into problems. About 100 workers, or 20% of the total employment, were let go in the company's first wave of layoffs as it created a business continuity plan. A few staff were also taken on by PhonePe.

Following the RBI's decision to increase credit risk weighting on unsecured personal loans, Zestmoney informed its staff in a town hall meeting on December 5, 2023, that the company was closing. Since NBFC lenders on the platform had stopped lending, the company's recovery had become even more challenging.

The business subsequently announced that the staff will be let go with help finding other employment and a furlough period. About 150 people worked at the company.

Moneycontrol was also informed by sources that DMI Finance has confirmed that all current staff members would continue working for the business.