UPI payment platform, PhonePe has stepped back from acquiring Zestmoney due to concerns over due diligence. The buy-now-pay-later (BNPL) platform failed to meet the due diligence standards of PhonePe according to people familiar with the deal. The talks of the acquisition have been going on since November last year with ZestMoney seeking a $200-$300 million valuation. The BNPL startup integrated digital banking, artificial intelligence and mobile banking to provide a digital credit line to its users. The lending startup has 17 million registered users and can be accessed in 85,000 retail points including physical and online locations across India.
According to an Economic Times report, the high $200-$300 million valuation asked by ZestMoney, the failure to meet the due diligence standard of PhonePe, the question of ZestMoney’s sustainability of Business, and Zest Money’s shareholding structure were the hindrances in the deal.
Walmart-owned PhonePe was looking to acquire ZestMoney as it plans its expansion into the lending space to help reach the monetization goals of the platform. The payments platform has been resilient to the ongoing funding winter as it raised $650 million in 2023 at a valuation of $12 billion. On the other hand, ZestMoney has been cash-strapped amid the downturn in funding and had previously raised $50 million from Zip in 2021.
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