Buy Now Pay Later startup ZestMoney, a month after its complete shutdown, was acquired by non-banking finance company DMI Finance on January 17, the company said in a press release on Wednesday. The acquisition was done through a fire sale deal.
This comes a month after ZestMoney announced that it would be shutting down all its operations on December 8. The firm also announced the layoff of 150 employees from the startup last month due to failing profits and slow growth.
“DMI Finance, the NBFC arm of DMI, will be a preferred lender on the Zest platform. Through this acquisition, DMI will have the exclusive right to the use of all Zest brands,” DMI said in its press release.
DMI Finance had been contemplating the acquisition of Zest for several weeks now, and competed with firms like Aditya Birla Finance, Piramal and Hero Fincorp for taking over the BNPL company.
However, Aditya Birla and Piramal backed out of the deal a few days ago citing high exposure, which amounts to nearly ₹700-800 crore in the ZestMoney deal, reported Moneycontrol citing sources.
DMI further said in its release, “This acquisition will enable DMI to widen its engagement with current and potential customers by adding the ZestMoney checkout financing platform to its product suite. DMI will also bring its customer base, balance-sheet strength and significant risk-management experience to drive growth across Zest’s online and offline merchant network.”
ZestMoney had raised over $130 million in its eight years as a startup, and was valued at $450 million at its peak. The company was also backed by firms like Goldman Sachs, PayU, Quona, Zip, Omidyar Network and Ribbit Capital.
PhonePe’s deal with Zest collapse
In November 2022, when ZestMoney was struggling to make profits, digital payment platform PhonePe was in talks to acquire the company. It was estimated that the deal size would be around $200-$300 million.
However, PhonePe ended up backing out of the deal, citing issues with due diligence, leaving ZestMoney in a lurch. The company started laying off hoards of employees after the deal with PhonePe fell through, eventually announcing that the company was shutting down.