DMI group acquires BNPL startup ZestMoney in a distress sale deal

DMI group acquires BNPL startup ZestMoney in a distress sale deal | The Enterprise World

(Source – Business Standard)

On Wednesday, DMI Group made a significant announcement regarding its latest strategic move in the financial services sector. The pan-India financial services platform revealed its acquisition of ZestMoney, a distressed ‘buy now pay later’ (BNPL) platform. This acquisition is facilitated through DMI Finance, the Non-Banking Financial Company (NBFC) arm of DMI, which will now function as a preferred lender on the ZestMoney platform.

While specific details about the size of the deal remain undisclosed, it is characterized as a distress sale, shedding light on the challenges faced by ZestMoney leading up to this acquisition. Notably, ZestMoney recently experienced a formal shutdown, resulting in the unfortunate termination of its entire workforce by December.

Financial services conglomerate with core operations 

Following the acquisition, DMI Group will assume exclusive rights to all Zest brands. This strategic move is expected to enhance the group’s engagement with ZestMoney’s user base and product suite, as outlined in the firm’s official release.

Established in 2008, DMI stands as a financial services conglomerate with core operations spanning digital, housing, and asset finances. The group boasts an impressive track record of raising over $1.5 billion in investment from renowned blue-chip investors, including leading banks.

DMI Finance, a key player within the group, operates as a pure-play digital lender, offering a range of financial products, including consumption, personal, and Micro, Small, and Medium Enterprises (MSME) loans. In April 2023, DMI Finance garnered attention with the announcement of a $400 million equity round, led by Mitsubishi UFJ Financial Group, Inc.

Culminating in the decision to cease operations

In contrast, ZestMoney navigated a different trajectory, raising approximately $125 million during its operational lifespan, incorporating a substantial debt component. The BNPL startup faced regulatory challenges and a tough funding environment, culminating in the decision to cease operations, despite having closed a notable $58 million Series C round in September 2021.

This acquisition positions ZestMoney as the second company to be assimilated into a larger group following the exit of all co-founders. In a parallel occurrence last year, GoMechanic underwent a similar fate, being acquired by LifeLong Group, as all three co-founders departed amid financial irregularities.

The DMI Group’s acquisition of ZestMoney underscores the dynamism and challenges within the financial technology landscape, demonstrating the strategic realignment of companies to navigate industry shifts, regulatory complexities, and market demands. As DMI steps into the BNPL domain through ZestMoney, the financial services conglomerate aims to leverage this acquisition to expand its footprint and fortify its position in the evolving financial services sector in India.

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