PhonePe cancels deal to acquire ZestMoney

31 Mar 2023 , 11:07 AM

PhonePe, a prominent player in digital payments, is reportedly backing out from its plan to acquire ZestMoney, a buy-now-pay-later platform, due to concerns raised during its due diligence process. Three individuals familiar with the matter have disclosed this information.

ZestMoney has been dealt a significant setback with PhonePe’s decision to back out from its acquisition deal. This comes at a time when technology startups worldwide are facing a decline in funding, and it has raised doubts about ZestMoney’s ability to survive.

The main reason behind PhonePe’s withdrawal from the deal was the shortcomings that were uncovered during the due diligence process.

Sources familiar with the matter have revealed that concerns regarding the viability of ZestMoney’s business, as well as uncertainties regarding its shareholding structure across its Singapore and Indian entities, may have contributed to the obstacles that ultimately led to the breakdown of the acquisition negotiations.

Insiders with access to the information have disclosed that PhonePe had proposed a cash offer of $90 million to acquire ZestMoney, a company established in 2015 by Lizzie Chapman, Priya Sharma, and Ashish Anantharaman.

Additionally, the terms of the deal included assuming ZestMoney’s debt obligations amounting to $35-40 million, as well as a $10 million payout to its founders.

According to several individuals familiar with the matter, ZestMoney was previously assessed to be worth $400 million.

For feedback and suggestions, write to us at [e-mail]