BENGALURU: Fintech company PhonePe has cancelled its plan to acquire ZestMoney. This is a huge setback for the buy-now-pay-later company. In November last year, it was said that PhonePe will acquire ZestMoney in a deal pegged at $200 million-$300 million.
According to sources familiar with the deal, PhonePe had to cancel it due to various reasons including a slowdown in the fintech sector, regulatory environment and also due to macroeconomic uncertainty.
A person in the know said the deal also had to be cancelled as ZestMoney didn’t meet the due diligence and the company is not going ahead with the acquisition deal at present.
Now, ZestMoney has to look for other options such as raising funds and also find a new acquirer. Sources said ZestMoney will evaluate all options. The start-up employs around 450 people and since the deal is now called off it is not yet known whether the company would fire some of its employees.
ZestMoney, which was founded in 2015 by Lizzie Chapman, Priya Sharma and Ashish Anantharaman, was last valued at $470 million. In September 2021, it raised $50 million, and in June 2022, the start-up raised around $20 million.