Fintech company ZestMoney to cut 20% workforce: Report | India is booming
Bengaluru: ZestMoney, a buy now pay later (BNPL) platform based in Bengaluru, is cutting 100 jobs, around 20% of its workforce, Business Standard reported.
This decision came after fintech company PhonePe abandoned its plan to acquire ZestMoney.
ZestMoney, which is backed by Goldman Sachs and Xiaomi, has around 450 employees, all of whom would have been integrated into PhonePe if the acquisition had gone through.
On March 30, ZestMoney’s founders informed employees about the layoffs in various departments during a town hall meeting. PhonePe is currently in talks with ZestMoney to hire some of the affected workers.
“The company is working on a business continuity or survival plan and layoffs are part of that,” Business Standard quoted a person familiar with the matter as saying. “PhonePe management is also in talks with ZestMoney to hire some of the 350 employees remaining at the firm, and those discussions are still ongoing.”
Citing sources, the report said the employees laid off by ZestMoney will receive a severance package that includes health insurance.
The proposed acquisition of ZestMoney by PhonePe, which was expected to be worth between $150 million and $300 million, fell through due to various issues, such as lack of due diligence, disagreements over valuation and business sustainability, and concerns about ZestMoney’s ownership structure. said citing sources.
According to the report, the deal also collapsed due to an economic downturn in the financial technology (fintech) sector amid a funding winter, a strict regulatory environment and macroeconomic uncertainty.
Walmart-backed PhonePe had hoped the ZestMoney deal would boost its lending services and enable it to compete more effectively with other major players in India’s fast-growing fintech sector, such as Google Pay, Paytm and Amazon Pay.
The Indian fintech market is estimated to reach a value of $350 billion by 2026.
During the acquisition evaluation process, PhonePe provided ZestMoney with a loan of approximately $18 million.
ZestMoney was established in 2015 by Lizzie Chapman, Priya Sharma and Ashish Anantharaman. The service enables customers to make purchases and use them immediately while paying for them over time.
The popularity of pay-later solutions in India has grown due to an increase in online shopping, as well as the country’s affordable data plans and widespread use of smartphones.
ZestMoney is currently available at 85,000 outlets across India and has a registered user base of 17 million, according to the report.
