DMI Finance, Aditya Birla In Fray To Take Over Lending Startup ZestMoney

Non-banking finance companies DMI Finance and Aditya Birla Finance are in discussions to acquire Bengaluru-based fintech startup ZestMoney in a potential firesale.

Although negotiations are still ongoing, a deal may be finalised soon, ET reported.

Aditya Birla Finance and DMI Finance, both partners of ZestMoney, have examined the financial records of the lendingtech startup.

The lenders are expressing interest in acquiring not only the technology platform of ZestMoney but also considering taking control of the loan book that the startup had built for its partners.

ZestMoney currently holds an outstanding loan book of approximately INR 400 Cr, which it sourced for its lending partners. The startup primarily operated as a sourcing platform, facilitating loans for its partner NBFCs, rather than independently maintaining its own loan portfolio.

Earlier this month it was reported that ZestMoney is about to shut down as the efforts of the new management to revive the company have failed to materialise.

The fintech startup will wrap up operations by the end of December and lay off its entire workforce of 150 employees, the startup’s new leadership team announced this in a town hall meeting.

The development came after the company failed to raise a follow-on round or find a buyer to save its sinking ship.

The company’s original cofounders – Lizzie Chapman, Priya Sharma and Ashish Anantharaman, quit the startup in May this year. Their resignations also came after the acquisition talks with fintech major PhonePe failed. At the time, the company had to trim 30% of its workforce.

Founded in 2015 by Chapman, Sharma and Anantharaman, the startup offers BNPL services to customers, enabling them to pay their shopping bills in three instalments at 0% interest rate.

Backed by names such as Prosus, Quona, Zip, Omidyar Network and Ribbit Capital, ZestMoney raised more than $130 Mn during its lifetime. At its peak, it commanded a valuation of $445 Mn – $450 Mn and was considered the poster child of the BNPL ecosystem in the country.

ZestMoney’s losses grew 3X year-on-year (YoY) to INR 398.8 Cr in the financial year 2021-22 (FY22) against INR 125.8 Cr reported in FY21. However, revenues grew by 1.6X YoY to INR 145 Cr in FY22.