In the aftermath of the failed acquisition deal between digital payment platform PhonePe and digital lending platform ZestMoney, it has been reported that PhonePe may be considering waiving off ZestMoney’s debt of $18 million.
The acquisition deal, which was announced in August 2021, was expected to be a significant milestone in the Indian fintech industry, with PhonePe looking to expand its offerings by acquiring ZestMoney’s expertise in digital lending. However, the deal hit a roadblock when the Competition Commission of India (CCI) raised concerns about the potential anti-competitive effects of the merger.
Despite attempts to address these concerns, including the proposed divestment of ZestMoney’s credit line business, the CCI ultimately rejected the merger in December 2021. As a result, PhonePe was left with a significant debt owed by ZestMoney.
Now, sources close to the matter have indicated that PhonePe may be considering waiving off ZestMoney’s debt, as a gesture of goodwill following the failed acquisition. While no official announcement has been made yet, this move would be seen as a positive step for both companies and the wider fintech industry in India. It would also help to strengthen PhonePe’s position in the sector as it looks to expand its presence even further.
The potential forgiveness of ZestMoney’s debt would be a significant boost for the digital lending platform, which has been hit hard by the pandemic-induced economic downturn. With the debt forgiven, ZestMoney would have more financial flexibility to pursue its growth plans and continue offering innovative lending solutions to Indian consumers. Ultimately, the decision to forgive the debt could benefit both ZestMoney and its customers.
The impact of this news is expected to be far-reaching. If it goes through, it could signal a new era of financial inclusion in India, with many more individuals gaining access to capital and credit.
For PhonePe, the move would be a clear indication of the company’s commitment to supporting the wider fintech ecosystem in India. While the failed acquisition deal was undoubtedly a setback, PhonePe’s decision to forgive ZestMoney’s debt would demonstrate that the company is willing to look beyond short-term setbacks and prioritize long-term relationships with its industry peers.
The potential move is also indicative of the growing maturity of the Indian fintech industry. As the industry continues to grow and evolve, collaborations and partnerships between different players in the ecosystem are becoming increasingly important. While competition is still fierce, there is a growing recognition that working together is often more beneficial than going it alone.
Of course, there are also potential risks associated with forgiving ZestMoney’s debt. While it would be a positive move for both companies, it could set a dangerous precedent for other companies in the industry. If other fintech companies start to expect similar treatment, it could put PhonePe under significant financial strain.
There is also the question of how this move would be received by shareholders. While it would be seen as a positive step by many, there may be concerns about the impact on PhonePe’s bottom line. Forgiving a debt of $18 million is no small matter, and shareholders may be worried about the potential long-term effects of such a move.
Despite these concerns, however, it seems likely that PhonePe will move ahead with the potential forgiveness of ZestMoney’s debt. The move would be seen as a positive step for both companies, and would help to cement PhonePe’s position as a leader in the Indian fintech industry.
Overall, the failed acquisition deal between PhonePe and ZestMoney was undoubtedly a setback for both companies. However, the potential forgiveness of ZestMoney’s debt would be a positive step forward, and would demonstrate the growing maturity of the Indian fintech ecosystem. While there are potential risks associated with such a move, it seems likely that PhonePe will move ahead with the decision in the coming weeks.
