DMI Group buys troubled BNPL startup ZestMoney in a fire sale deal

Indian financial company DMI Group said it has acquired the troubled 'buy now, pay later' (BNPL) startup ZestMoney in a fire sale deal. Last fortnight, Multiple media reports suggested that DMI Finance and Aditya Birla Finance are in talks to buy the failed fintech startup. 

The development is set to expand DMI's reach in digital finance, housing finance, and asset management. DMI Finance, the NBFC arm of DMI, will become a preferred lender on the Zest platform, gaining exclusive rights to ZestMoney brands.

The struggle of ZestMoney

Founded in 2015, ZestMoney faced significant challenges leading up to the acquisition. The startup, which was once valued at $470 million, experienced a downturn after the founders resigned and a proposed acquisition by PhonePe fell through.

Additionally, the regulatory changes and a funding winter further strained ZestMoney, leading to layoffs and operational difficulties. Despite these challenges, DMI has been a long-term supporter of ZestMoney, with an 8-year partnership history.

"We have been partnered with ZestMoney for 8+ years in various capacities. We firmly believe that this acquisition will be an important step in our journey to provide digital financial inclusion at scale across India," said Shivashish Chatterjee, Co-founder and Joint Managing Director of DMI.

Mandar Satpute, Chief Operating Officer of Zest said: “DMI has been at the forefront of digital lending in India. They bring strong capital support and deep expertise. DMI has been an early supporter of ZestMoney and we are very excited to take our partnership to a whole new level."

What will be changed after the acquisition?

With this acquisition, DMI aims to enhance customer and merchant engagement by integrating ZestMoney's checkout financing platform into its offerings. DMI's strong capital support, customer base, and risk management expertise are expected to rejuvenate ZestMoney's network of over 80,000 merchants across India, the firm said in a statement. 

The future for ZestMoney employees

While the company didn't reveal the restructuring, A report from Moneycontrol claimed that DMI Finance has assured that all existing ZestMoney employees will remain with the company.

This comes as a relief following ZestMoney's previous announcement of a shutdown and layoffs, which impacted around 150 employees.

What does ZestMoney do?

Founded in 2015, Zest is a fully automated digital customer onboarding and servicing system, enabling customers to apply for and receive digital credit instantly at the point of sale. It has more than 80,000 merchants across India, including Amazon, Flipkart, Myntra, MakeMyTrip, Nykaa, Samsung, Apple, Vivo, Croma, and Reliance Digital. 

Offering loans to MSMEs, individuals 

DMI includes DMI Finance (“DMI Finance") which is a pure-play digital lender with products including consumption, personal and MSME loans. It leverages technology to optimize every step in the lending stack, from sales and underwriting through to customer service and collections.

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