Fintech major PhonePe has called off the acquisition of Buy Now Pay Later (BNPL) start-up Zestmoney after months of business due diligence.
According to a source close to the matter, “PhonePe is not going ahead with the deal because the business due diligence of Zestmoney did not meet the required standards.” Confirming the development, another source added that the deal was called off for multiple reasons including the tough macroeconomic environment and growing regulatory scrutiny around lending companies.
PhonePe was in talks to acquire Zestmoney for $200-$300 million since November 2022. 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.
PhonePe and Zestmoney did not share any comments on this development.
Valuation jump
PhonePe was valued at $12 billion in its latest funding round and the company also announced hitting an annualised total payment value (TPV) run rate of $1 trillion (₹84 lakh crore) in March 2023.
Addressing the jump in PhonePe valuation to $12 billion, in a recent earnings call, Walmart CFO John David Rainey said that this valuation was supported by the fintech company’s annualised TPV reaching more than $950 billion (about 50 per cent higher than just a year ago) and the platform also exceeded more than four billion monthly transactions. The US-based retail major holds a majority stake in Indian e-commerce platforms Flipkart and PhonePe.