After three months of discussions, PhonePe has called the deal to acquire buy-now-pay-later (BNPL) platform ZestMoney, a report on Thursday said. The announcement of the same will soon be made to the employees of ZestMoney.
According to a report by The Economic Times (ET) released on Thursday, this will be a big blow to ZestMoney when the sector struggles with a cash and funding crunch. A person aware of the development was quoted in the report as saying, "The deal is off, the company boards and investors were made privy to the development over the last few days...PhonePe is not going ahead with the acquisition after months of due diligence."
The main reasons the deal fell out were lapses in due diligence, disagreement over valuation, sustainability of the business and the platform's shareholding structure. Reports also said that ZestMoney's valuation of $200-300 million might also be a reason for the deal not fructifying.
In September 2021, the company raised $50 million from Zip and was expecting to raise $100 million more. But it could not go ahead with the deal due to the global slowdown.
Founded in 2015, Bengaluru and Mumbai-based ZestMoney is backed by PayU, Ribbit Capital and Goldman Sachs.
The BNPL platform focuses mainly on large-ticket transactions and checkout of various e-commerce websites.
