PhonePe, the digital payments platform owned by Flipkart, has reportedly withdrawn from acquiring ZestMoney, a fintech startup that offers digital lending services to consumers. The news comes after months of negotiations between the two companies, which were said to be in advanced stages of talks.
According to sources familiar with the matter, PhonePe had been looking to acquire a majority stake in ZestMoney for around $200 million. However, the deal fell through due to disagreements over valuation and other terms.
ZestMoney, which was founded in 2015, has emerged as one of the leading players in the digital lending space in India. The company offers a range of financial products, including personal loans, credit cards, and EMI financing, to customers who may not have access to traditional banking services.
The startup has raised over $50 million in funding from investors such as Ribbit Capital, Xiaomi, and PayU. It currently has partnerships with over 3,000 merchants across various sectors, including e-commerce, travel, and healthcare.
PhonePe, on the other hand, has been expanding its offerings beyond just payments. The platform recently launched a wealth management service and is also said to be exploring opportunities in the insurance and mutual fund sectors.
The decision to withdraw from the ZestMoney deal is unlikely to have a significant impact on PhonePe’s business, as the company already has a strong presence in the digital payments space. However, it does highlight the challenges that fintech startups face when it comes to raising funds and finding suitable partners.
In recent years, there has been a surge in interest in the Indian fintech sector, with investors pouring billions of dollars into startups that are disrupting traditional financial services. However, as the market becomes more crowded, it is becoming increasingly difficult for smaller players to stand out and attract funding.
Despite the setback with ZestMoney, PhonePe is likely to continue exploring opportunities in the fintech space. The company has a large user base and a strong brand, which could make it an attractive partner for other startups looking to scale their operations.
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