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PhonePe is in talks to acquire Buy Now Pay Later (BNPL) startup Zestmoney for $200-$300 million, according to two sources aware of the development.
The all-cash deal is expected to close in 3–4 weeks’ , after which Zestmoney will continue to operate as an independent entity and its founders will join PhonePe. The $200-$300 million valuation is lower than Zestmoney’s last valuation of $450 million.
Speaking to businessline, one of the sources said, “The macro-environment has impacted the valuations of lending businesses. Through Zestmoney’s acquisition, PhonePe gets access to its lending business, tech stack, and 27 lending partners, among other things. Zestmoney has reduced its cash burn in the past six months and is also targeting EBITDA profitability.”
Strong network
As of October, Zestmoney had a network of over 10,000 online partners and 75,000 physical stores. It has built a platform that integrates mobile technology, digital banking, and artificial intelligence, enabling people to apply for and get a digital credit line. Zestmoney has a registered user base of 17 million and is live at 85,000 retail touchpoints across India.
“Zestmoney is in compliance with the RBI guidelines, which is one of the reasons for PhonePe’s interest in the BNPL company. Zestmoney also has a healthy monthly loan disbursal of around ₹400 crore,” added an industry source.
PhonePe was valued at $5.5 billion in December 2020 and is now in talks to raise a new funding round at a $12 billion valuation. Till now, PhonePe has acquired companies like GigIndia, WealthDesk, OpenQ, and IndusOS. PhonePe competes with the likes of Paytm and BharatPe.
PhonePe currently has over 190 million monthly active users, over 125 million daily transactions, 420 million registered users, and an annualized TPV (total payment value) run rate of $910 billion. The company processes close to 4 billion transactions a month.
Zestmoney and PhonePe did not comment on businessline queries about the development.
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