DMI Finance, the financial services conglomerate, has officially acquired the struggling buy now pay later (BNPL) startup, ZestMoney, in a move that aims to broaden its digital financial services. The acquisition was announced recently, marking a significant development in the financial technology sector.
In the wake of a distress sale, DMI Group has successfully acquired ZestMoney, a BNPL platform that recently faced a formal shutdown. Despite the closure, the details of the deal size remain undisclosed. ZestMoney, which laid off its entire workforce by December, had been grappling with challenges arising from stringent regulations on BNPL startups and a difficult funding environment.
DMI Finance as the Preferred Lender on Zest Platform
Following the acquisition, DMI Finance, the non-banking financial company (NBFC) arm of DMI Group, will become the preferred lender on the ZestMoney platform. This strategic move will not only provide DMI with exclusive rights to all Zest brands but will also allow the group to expand its reach and engagement with ZestMoney's user base and product suite.
Founded in 2008, DMI Group has become a prominent player in the financial services sector, focusing on digital, housing, and asset finances. The conglomerate has raised a substantial amount, exceeding $1.5 billion in investments from blue-chip investors, including banks. DMI Finance, a pure-play digital lender under the group, offers a range of financial products, including consumption, personal, and MSME loans.
In April 2023, DMI Finance announced the successful closure of a $400 million equity round, led by Mitsubishi UFJ Financial Group, Inc. This funding injection positioned the group for strategic expansions and acquisitions, paving the way for the recent acquisition of ZestMoney.
ZestMoney's Startup Journey
ZestMoney, founded in 2018, raised approximately $125 million in its lifetime, with a significant portion attributed to debt financing. The startup's Series C round, closing at $58 million in September 2021, was a highlight in its fundraising journey. However, the challenging regulatory landscape for BNPL startups, combined with a tough funding environment, eventually led ZestMoney to the decision of a complete shutdown.
Notably, ZestMoney joins the ranks of startups facing acquisition after the exit of all co-founders. Last year, GoMechanic, an automotive service platform, witnessed a similar fate when it was acquired by LifeLong Group. The acquisition occurred amidst severe financial irregularities, prompting all three co-founders to leave the firm.
DMI Group's acquisition of ZestMoney reflects the evolving dynamics within the fintech sector and the strategic moves made by established players to strengthen their digital financial services portfolios. As DMI Finance integrates with ZestMoney's platform, the impact on users and the broader financial landscape will be closely observed.
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