In a distress sale deal, DMI Group acquires BNPL startup ZestMoney

Pan-India financial services platform DMI Group has acquired the troubled ‘buy now pay later’ (BNPL) startup ZestMoney in a distressed sale deal. The acquisition follows the shutdown of Bengaluru-based ZestMoney over a month ago, marked by unsuccessful attempts to revive its business under new management amidst regulatory uncertainty.

DMI Group, backed by over $1.5 billion in equity investment from global institutional investors and international banks, did not disclose the financial details of the transaction. The NBFC arm of DMI, DMI Finance, will become a preferred lender on the ZestMoney platform, gaining exclusive rights to the use of all ZestMoney brands.

Shivashish Chatterjee, co-founder and joint managing director of DMI, highlighted ZestMoney’s pioneering role in checkout finance in India and emphasized the acquisition’s importance in DMI’s journey to provide digital financial inclusion at scale. DMI, with core businesses in digital finance, housing finance, and asset management, aims to expand its engagement with customers by incorporating the ZestMoney checkout financing platform into its product suite.

ZestMoney, founded in 2015 by Lizzie Chapman, Priya Sharma, and Ashish Anantharaman, allowed customers to pay for products over time while using them immediately. The acquisition is expected to leverage DMI’s capital support, expertise, and risk-management experience to drive growth across ZestMoney’s online and offline merchant network, comprising over 80,000 merchants, including Amazon, Flipkart, and MakeMyTrip.

ZestMoney faced challenges, including the collapse of a proposed acquisition by fintech giant PhonePe in May of the previous year. The deal, estimated between $150 million and $300 million, fell through, leading to uncertainties for ZestMoney’s employees. The startup had also laid off 20% of its workforce in April and struggled to raise fresh capital amid a funding downturn.