ZestMoney faces layoffs as PhonePe acquisition falls through, 20 percent of workforce impacted
ZestMoney Mulls Alternatives After Failed Acquisition by PhonePe
8 April 2023
ZestMoney, an Indian financial business, intends to let go of about 100 of its 450 employees or 20% of its whole workforce.
The layoffs follow the collapse of a proposed takeover transaction with larger competitor PhonePe owing to regulatory concerns and inadequate due diligence.
Although PhonePe offered to recruit several ZestMoney staff members, it is unknown if any of the impacted staff members would be employed.
After the failure of a prospective purchase agreement with PhonePe, Indian fintech firm ZestMoney has revealed plans to fire 20% of its workforce or about 100 individuals. After conducting due diligence, the larger peer PhonePe, which is supported by Walmart, decided against purchasing ZestMoney. To assure company continuation, ZestMoney is presently evaluating additional possibilities, such as raising money or finding another buyer.
PhonePe has allegedly promised to hire up to 100–150 ZestMoney personnel across divisions as talks between the two businesses continue. It's unclear, though, whether the business will hire any of the impacted workers. Due diligence mistakes and regulatory problems caused the purchase to fail.
Apply to Xartup Fellowship Program
Get ₹1.5 Crore Technical Funding
Employees affected by the layoffs will get a month's pay as severance along with additional perks including insurance and mental health support. The layoffs will affect all divisions. The impacted workers were informed of the decision at a town hall on April 6 by ZestMoney's founders and top leadership group.
With the Central Bank of India's crackdown on digital lending last year, the Buy Now Pay Later (BNPL) industry has encountered difficulties in India. The regulatory climate and oversights in the due diligence process contributed to the failure of the proposed purchase between PhonePe and ZestMoney. As PhonePe continues to discuss hiring some of ZestMoney's staff, ZestMoney is developing a business continuity plan.
ZestMoney is presently looking at all possibilities, including raising money or finding a different buyer, to assure business continuity. Regarding PhonePe, it is said to be in discussions to hire several ZestMoney personnel, but nothing has been finalized as of yet. Although the difficulties the BNPL industry in India is facing, ZestMoney and PhonePe are probably going to keep looking for methods to get around the legal framework and grow their operations.