ZestMoney, once valued at $450Mn, sold to DMI a month after shut down

ZestMoney, the Indian buy-now-pay-later fintech backed by Goldman Sachs and valued at $450Mn at its peak, has been sold off to DMI Finance, in what looks like a distress sale. The announcement came via a late Wednesday press release, marking the closure of rough one year for ZestMoney. According to its final townhall conducted in December last year, the company told employees about an imminent shutdown.

Financial details of the deal remain undisclosed, though this seems like a distress sale wherein ZestMoney’s existing investors won’t make a return. According to the statement, DMI would have the exclusive right to the use of all Zest brands. DMI Finance, the NBFC arm of DMI, will be a preferred lender on the Zest platform.

Mandar Satpute, Chief Operating Officer of Zest said: “DMI has been at the forefront of digital lending in India. They bring strong capital support and deep expertise. DMI has been an early supporter of ZestMoney and we are very excited to take our partnership to a whole new level.”

DMI includes DMI Finance (“DMI Finance”) which is a pure-play digital lender with products including consumption, personal and MSME loans. It leverages technology to optimize every step in the lending stack, from sales and underwriting through to customer service and collections. The company is a pan-India financial services platform with core businesses in digital finance, housing finance and asset management. It has raised over $1.5Bn of investment capital from global institutional investors, strategic family offices and leading international banks.

The seven-year-old ZestMoney was last valued at nearly $450 million. At its peak, the startup boasted of a customer base of 17 million with loan disbursals of ₹400 crore per month. However, it was also grappled with financial challenges, exacerbated by a funding winter that made securing fresh capital an arduous endeavor for most. The company had initiated layoffs in April last year, trimming its workforce by 20%, equating to 100 employees. The decision formed part of a broader strategy aimed at ensuring business continuity amidst financial headwinds.

All three co-founders of ZestMoney had quit the company in May of last year, after a potential deal with PhonePe did not materialise.