More than a year later, the sector is in turmoil, with Zip Co’s market cap plummeting 93% since February 2021. Now, sources have told us that Walmart-owned PhonePe is on the verge of being acquired by ZestMoney in a sell-off. More information in the packaged ETtech Morning Dispatch.
Also in this letter:
■ Birla Fashion close to acquiring Bewakoof in a D2C project
■ No employee was fired, Amazon India told the labor ministry.
■ Six funded satellites are in development, says the Pixel founder.
PhonePe may acquire ZestMoney as consolidation begins in the lending sector
PhonePe, which is majority owned by Walmart, close to acquiring ZestMoney’s buy-now-pay-later (BNPL) platform two sources told us that against the backdrop of a global reset in the sector due to higher interest rates and reduced consumer spending.
If the deal goes through, it will be the biggest consolidation in the new century lending sector, which has recently faced major regulatory hurdles in India. In September, the Reserve Bank of India introduced a set of rules for online lenders.
No money: ZestMoney has been looking for a buyer for months, the people said, struggling to raise new funds as tech investors became too skittish, especially with fintech startups. “Negotiations are quite serious and will probably be completed in a few weeks,” another source said.
Stress Sale: We were unable to determine the size of the deal, but several people with knowledge of developments said it was likely to be a “post-disaster sale” at a valuation far less than the $400 million ZestMoney disposed of when it raised funds last year. . The company’s cash streak has shrunk as it burns around $5 million a month. The big blow for ZestMoney is that the Australian company Zip Co, which was supposed to raise $100 million last year, has itself been hit by the economic downturn.
The collapse of the BNPL: Founded in 2015 by Lizzy Chapman, Priya Sharma and Ashish Anantaraman, raised $50 million from Prosus-owned PayU and Australian fintech company Zip Co. in September 2021, amid a boom in the BNPL sector driven by a large increase in online shopping.
But the potential sale comes amid falling BNPL shares around the world. Zip Co’s market capitalization has fallen 93% since February 2021 due to higher interest rates. Other big BNPL players such as Sweden’s Klarna and PayPal co-founder Max Levchin’s Affirm have struggled to hold onto their valuations.
Aditya Birla Fashion close to acquiring Bewakoof in D2C
Aditya Birla Fashion and Retail (ABFRL) is in the final stages of acquisition controlling stake in clothing and accessories brand Bewakoof for around Rs 100 crore, signifying its entry into direct-to-consumer (D2C) sales.
Game state: “Both companies have signed a non-disclosure agreement and have also completed due diligence. The Bewakoof team is also relocating to join Aditya Birla’s new firm,” said a senior executive who requested anonymity.
Established in 2012, Bewakoof is one of the first D2C brands in the country with an annual revenue of around Rs 250 crore. In total, the company has raised Rs 160 crore from investors including InvestCorp, IvyCap Ventures and Spring Marketing Capital.
Foray D2C: In June, ABFRL created its D2C company called TMRW and said it would acquire and develop 30 brands over the next three years. The new firm, which is acquiring Bewakoof, is part of ABFRL’s strategy to build a portfolio of next-generation digital brands in fashion, beauty and lifestyle.
During last quarter’s earnings call, ABFRL said it would make eight to ten investments in early-stage digital brands by the end of the fiscal year and that its initial focus would be on fashion.
Not all? Dhyanu Das, co-founder of Agility Ventures, said: “We will certainly see many more such deals in the near future. It also helps early-stage investors get an exit at a time when larger funding rounds seem a bit tricky.”
Koo Co-Founder and CEO Apramea Radhakrishna
Ku’s estimate can double: Meanwhile, the homegrown social media platform Ku started fundraisinghoping to raise around $15-20 million in a round that would double its valuation to $250-300 million, sources briefed on the matter said.
The Bangalore-based company, which positions itself as an alternative to the microblogging site in the US, is expected to double its valuation to $250-300 million after the funding round. The company, which recently expanded to Brazil, is looking to close the smaller round to secure the capital it needs in the short term for Indian and overseas expansion, sources said, as it may not get the desired valuation in the larger round right now.
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ET Ecommerce Index
We launched three indexes – ET Ecommerce, ET Ecommerce Profitable and ET Ecommerce Non-Profitable – to track the performance of newly listed technology companies. This is how they have lived so far.
Amazon India has not fired a single employee, according to the labor ministry.
Amazon India told officials of the Ministry of Labor he fired no employees and fired only those who voluntarily opted for his layoff program by accepting severance pay.
Catch up fast: The ministry turned to Amazon for a response after the Pune-based Nascent Information Technology Employees Senate (NITES) petitioned the union’s labor minister, Bhupender Yadav, alleging that the online retailer forcibly laid off a large number of employees in India.
Amazon representatives appeared before the deputy chief labor commissioner in Bangalore 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 opinion of the trade union.
Amazon closes education technology business: Meanwhile, Amazon says it will close its education technology business Amazon Academy in stages starting from August 2023. The company kicked off the business during the pandemic, offering math and science courses to students preparing for engineering entrance exams.
Tweet of the day
Six funded satellites in development, says Pixel founder
Space technology startup Pixel Lines Up Six Fully Funded Satellites to launch in the next few quarters, its founder said.
Saturday demo: Pixxel will launch its third demonstration satellite on Saturday as high-resolution images from its microsatellites find applications in sectors ranging from agrotech, climate care to oil and gas.
In April, a company from Bangalore launched a 15 kg satellite into low earth orbit (LEO). on a SpaceX rocket.
“We are building six fully funded commercial satellites. These are much larger [compared to the demo satellites]with a much longer lifespan, and from which we will be able to report daily almost every two days,” founder and CEO Awais Ahmed told us.
Other top stories from our reporters
Swiggy trails Zomato despite big discounts: Gurugram’s Zomato competed in food delivery race in India gaining market share over its Bangalore competitor Swiggy in January-June 2022, despite Swiggy offering big discounts, according to research published by Jefferies on Thursday.
CoinDCX publishes a reserve confirmation report: Indian crypto exchange CoinDCX Publishes Confirmation of Reserves report in partnership with Nansen crypto portfolio tracking platform. At press time Thursday, CoinDCX’s assets stood at almost $130 million, Nansen said. Cryptocurrency exchanges and trading platforms around the world are posting their evidence of reserves following the collapse of FTX, one of the largest cryptocurrency exchanges in the world.
The Global Elections We Read
■ The Twitter exodus hits regulatory and content teams around the world. (WSJ)
■ FTX Cryptocurrency Empire in the Bahamas: Stimulants, Tricks and Spectacular Crash (Washington Post)
■ Hibernator’s Guide to the Galaxy (Wired)