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ZestMoney looking to lay off employees after deal with PhonePe fails

ZestMoney founders held a town hall on March 30 and informed employees about layoffs across depts, say sources; not known yet how many would be asked to go

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Peerzada Abrar Bengaluru
2 min read Last Updated : Mar 31 2023 | 11:23 PM IST
ZestMoney is looking to lay off several employees a day after Walmart-backed PhonePe decided to halt its proposed acquisition of the Bengaluru-based buy now, pay later (BNPL) platform. The Goldman Sachs- and Xiaomi-backed firm has about 450 employees, all of whom were expected to be absorbed by PhonePe if the acquisition had matured.

ZestMoney founders held a town hall on March 30 evening and informed employees about layoffs across departments, according to the sources. However, it is not known yet how many employees would be laid off.

"The company is working on a business continuity or a survival plan and layoffs are part of it,” said a person familiar with the matter. “The impact of the layoffs would be known in the next one or two weeks.”

ZestMoney didn’t respond when asked to comment on the new development.

The deal with PhonePe, which was poised to fetch anywhere between $150 million and $300 million, hit a snag over lapses in due diligence, disagreements over valuation, sustainability of the business, and shareholding structure of ZestMoney, according to people familiar with the matter.

The collapse of the deal is also being attributed to a slowdown in the financial technology (fintech) sector amid a funding winter, difficult regulatory environment, and macroeconomic uncertainty, informed other sources.

The acquisition was expected to help PhonePe strengthen its lending services and compete with Google Pay, Paytm, and Amazon Pay in Indian fintech, expected to be purportedly worth $350 billion by 2026.

PhonePe had also given a loan of about $18 million to ZestMoney when the company was evaluating the acquisition.

Founded by Lizzie Chapman, Priya Sharma, and Ashish Anantharaman in 2015, ZestMoney allows customers to pay for products over time, but use them right away. Increasing smartphone penetration, the cheapest data plans in the world, and a boom in online shopping have propelled the demand for pay-later offerings in the country.

ZestMoney has a registered user-base of 17 million and is live at 85,000 retail touchpoints across India.

The company had a valuation of $470 million that it achieved in the last funding round.

ZestMoney raised $50 million in September 2021, which the company had topped with an additional $20 million raise as part of its Series C round. The firm has raised a total of $140 million from investors such as Australia’s BNPL platform Zip, Goldman Sachs, Quona Capital, and Xiaomi.

Topics :ZestMoneylayoffPhonePeemployees

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