PhonePe may acquire ZestMoney; Aditya Birla Fashion close to buying Bewakoof; and Koo’s new funding round

When ZestMoney raised $50 million from Prosus-owned PayU and Australian fintech Zip Co in September 2021, the buy-now-pay-later (BNPL) segment was booming thanks to a pandemic-induced spike in online shopping.

More than a year later, the industry is in turmoil, with Zip Co’s market cap down 93% since February 2021. Now, sources have told us that Walmart-owned PhonePe is on the verge of acquiring ZestMoney in what is a crash sale. More details in a rich edition of ETtech Morning Dispatch.

Also in this letter:
■ Birla Fashion close to acquiring Bewakoof in D2C raid
■ I have not fired any employees, Amazon India told the labor ministry
■ Six funded satellites in the works, says Pixxel founder


PhonePe may acquire ZestMoney as consolidation begins in the lending industry

PhonePe ZestMoney

Majority-owned Walmart PhonePe is close to acquiring buy-now-pay-later (BNPL) platform ZestMoney amid a global industry reset amid rising interest rates and shrinking consumer spending, two sources told us.

If the transaction goes through, it will be the biggest consolidation in the new-age lending industry, which has been facing major regulatory hurdles in India in recent times. In September, the Reserve Bank of India introduced a set of rules for online lenders.

No fund: ZestMoney has been looking for a buyer for some months, having struggled to raise new funds as tech investors have become overly skittish, especially about fintech startups, these people said. “The talks are quite serious and will probably close in a few weeks,” another source said.

ZestMoney

Relief Sale: We couldn’t ascertain the size of the deal, but several people familiar with the development said it was likely a “contingency sale,” with a valuation far below the $400 million ZestMoney requested when it raised funds there. last year. The company’s cash trail shortened as it burned through about $5 million a month. The blow to ZestMoney came when Australia’s Zip Co, which was expected to ride its $100 million last year, was itself hit by the recession.

BNPL collapse: The firm, founded in 2015 by Lizzie Chapman, Priya Sharma and Ashish Anantharaman, last raised $50 million from Prosus-owned PayU and Australian fintech Zip Co in September 2021 amid a boom in the sector BNPL fueled by sharp increase in online shopping.

But the potential sale comes amid a rout for BNPL stock worldwide. Zip Co’s market capitalization has plunged 93% since February 2021, hit by higher interest rates. Other BNPL bigwigs like Sweden’s Klarna and PayPal co-founder Max Levchin’s Affirm have struggled to maintain their valuations.


Aditya Birla Fashion close to acquiring Bewakoof in D2C foray

bewakoof

Aditya Birla Fashion & Retail (ABFRL) is in the final stages of acquiring a controlling stake in clothing and accessories brand Bewakoof for around Rs 100 crore, marking its entry into direct-to-consumer (D2C) sales.

Progress: “Both companies have signed a non-disclosure agreement and have also finished their due diligence. Bewakoof’s team is also moving to join Aditya Birla’s new firm,” said a senior executive, who did not wish to be identified.

Established in 2012, Bewakoof is one of the earliest D2C brands in the country, with an annual turnover of around Rs 250 crore. In total, it has raised Rs 160 crore in funding from investors including InvestCorp, IvyCap Ventures and Spring Marketing Capital.

D2C Raid: In June, ABFRL set up its D2C entity, called TMRW, and said it would acquire and incubate 30 brands over the next three years. The new company, which is acquiring Bewakoof, is part of ABFRL’s strategy to build a portfolio of new-age digital brands across fashion, beauty and lifestyle.

During its earnings call last quarter, ABFRL said it will make 8 to 10 investments in early-stage digital-first brands by the end of the financial year and that its initial focus will be on fashion.

And there’s more? Dhianu Das, co-founder of Agility Ventures, said: “We will certainly see many more similar deals in the near future. This also helps early-stage investors secure exit opportunities at a time when larger funding rounds look a bit challenging.”

Aprameya Radhakrishna

Co-founder and CEO of Koo, Aprameya Radhakrishna

Koo’s rating can double: Meanwhile, local social media platform Koo has kicked off a fundraising exercise, seeking to raise an estimated $15-20 million in a round that would double its valuation to $250-$300 million, informed sources said. on the matter.

The Bengaluru-based company, which markets itself as an alternative to the US-based microblogging site, is expected to double its valuation to $250-$300 million after the funding round. Sources said the company, which recently expanded into Brazil, is looking to close a smaller round to secure capital it needs in the near term for India and overseas expansion, as it may not get the desired evaluation in a larger round at this time.


A MESSAGE FROM APPSFLYER

“MAMA India – The Digital Bharat 2.0” by AppsFlyer

Mom

Economic Times Digital is partnering with AppsFlyer to bring you ‘MAMA India – The Digital Bharat 2.0’, an invite-only event that will bring together mobile app product leaders, mobile marketing influencers, startup founders, key investors and policy makers to foster a definitive conversation that will educate and enable companies to capitalize on the growth opportunities available in the increasingly mobile-first and app-centric Indian market.

“India’s app economy is the fastest growing in the world and promises huge growth opportunities as India realizes its vision of becoming a digitally enabled society with Digital India 2.0. AppsFlyer is committed to helping India’s app ecosystem unlock its full potential. MAMA India – The Digital Bharat 2.0 event is one such initiative to empower marketers, startups, product developers and innovators to win in India’s fast growing app economy,” said Ronen Mense, President & MD, APAC, AppsFlyer.


ET Ecommerce Index

We have launched three indices – ET Ecommerce, ET Ecommerce Profitable and ET Ecommerce Non-Profitable – to track the performance of recently listed technology companies. Here’s how they’ve fared so far.

Ecommerce Tracker ET

I have not fired any employees, Amazon India tells the labor ministry

Amazon layoffs

Amazon India told labor ministry officials it has not laid off any employees and has only let go of those who have voluntarily opted into its severance program by accepting a severance package.

Recover fast: The ministry had sought Amazon’s response after the Pune-based Nascent Information Technology Employees Senate (NITES) union petitioned Union Labor Minister Bhupender Yadav, alleging that the online retailer had forcibly fired a large number of employees in India.

Amazon representatives appeared before the Deputy Chief Labor Commissioner in Bengaluru on Wednesday and denied the allegations, according to people briefed on the matter. However, no one represented the union at Wednesday’s hearing. The authorities decided to make a decision after hearing the union’s opinion.

Amazon to shut down edtech business: Meanwhile, Amazon said it would shut down its edtech business Amazon Academy in stages, starting in August 2023. The company launched the business during the pandemic, offering math and science classes for students preparing for the pandemic. engineering entrance exam.

TWEET OF THE DAY


Six funded satellites in the works, says Pixxel founder

Satellite pixels

Space tech startup Pixxel is lining up six fully funded satellites for launch in the coming quarters, its founder said.

Saturday demonstration: Pixxel will launch its third demonstration satellite on Saturday as high-resolution images from its micro-satellites are finding buyers in a range of industries, from agri-tech, climate care, to oil and gas.

In April, the Bengaluru-based company launched a 15kg low Earth orbit (LEO) satellite on a SpaceX rocket.

“We are building six fully funded commercial satellites. These are much bigger [compared to the demo satellites]with a much longer duration and from which we will be able to do daily coverage almost every other day,” founder and CEO Awais Ahmed told us.


More top stories from our reporters

Swiggy Zomato

Swiggy follows Zomato despite the bigger discounts: India’s food delivery rush saw Gurugram-based Zomato gain market share over its Bangalore-based rival Swiggy in January-June 2022, though Swiggy offered bigger discounts, according to a research note published Thursday by Jefferies.

CoinDCX publishes test report of reserves: Indian cryptocurrency exchange CoinDCX has released its reserves test report in collaboration with cryptocurrency portfolio monitoring platform Nansen. As of Thursday’s release, CoinDCX had nearly $130 million in assets, according to Nansen. Cryptocurrency exchanges and trading platforms around the world have released their proof of reserves from the collapse of FTX, one of the largest cryptocurrency exchanges in the world.


Global choices we are reading

■ Twitter exodus affects global content and regulatory teams (WSJ)
■ FTX’s Bahamian Crypto-Empire: Stimulants, Subterfuge, and a Spectacular Collapse (The Washington Post)
■ Hibernator’s Guide to the Galaxy (wired)

Leave a Reply

Your email address will not be published. Required fields are marked *