#DMIFinance's Co-Founder and Joint MD, Shivashish Chatterjee talks about the acquisition of #ZestMoney and their future prospects.
Watch him in conversation with Rishabh Bhatnagar.
For the latest news and updates, visit: ndtvprofit.com
Watch him in conversation with Rishabh Bhatnagar.
For the latest news and updates, visit: ndtvprofit.com
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TVTranscript
00:00 Hello viewers, welcome to IDTV Prophet.
00:02 This is Rishabh Bhatnagar and today I'm joined by Shivashish Chatterjee.
00:06 He's the joint managing director and co-founder of DMI Group.
00:10 He's here today to talk to us about the Zest money acquisition that was announced a few days ago.
00:17 We'll talk a bit about the rationale and what actually went behind the deal.
00:21 Thank you so much Shivashish for taking the time out.
00:24 I'd like to start us off and our viewers off by letting you sort of lay the ground on how the transaction went about,
00:34 what the rationale behind is and what the conversations with the Zest money founders were like.
00:41 Thank you Rishabh. Thank you for having me on your show.
00:44 And you know, Zest money is one of the early names in the fintech revolution that India has seen over the last six or seven years.
00:56 And actually DMI has a very long history of working with Zest money.
01:01 We were, I believe DMI was maybe the first lender on the Zest money platform when they first went live.
01:09 And so we have seen them grow from essentially an idea on a piece of paper to a startup with seed funding to series A, series B, series C funding.
01:21 And it was obviously, you know, not the best outcome for the platform.
01:31 But for DMI, it made a lot of sense. The synergies are obvious.
01:35 We know exactly what they do. We are very familiar with their technology.
01:40 We are very familiar with their processes.
01:43 And so we believe that the effort that has gone into building Zest money as a platform can be put to good use by DMI,
01:54 where we can act as the preferred lender on the platform going forward.
01:58 And we can expand the reach that we already have for our customer base by bringing them access to Zest money suite of products.
02:12 Interesting, interesting.
02:13 Suresh, could you shed some light on when these conversations started and when did you seriously zero down on Zest money being a part of the DMI group?
02:26 So, I mean, you know, the history of Zest money's difficulties are pretty well chronicled at this point.
02:33 There have been a lot written about it, especially the phone pay transaction that was supposed to have happened and did not happen, fell apart earlier in 2023.
02:45 And then from there, they have been in some sense, they have been struggling to keep the platform afloat.
02:54 And we had worked with them all through 2000 and, you know, 2021, 22.
03:01 We stopped working with them somewhere in the middle of 2022.
03:05 So our engagement with them was pretty much at zero by the time the phone pay transaction happened.
03:13 But we kept in touch with them from both from a personal and a business perspective.
03:19 And then in late November, early December, the rumors started swirling about how they were going to shut down.
03:29 And I understand that management at Zest money actually sent an internal letter saying that the platform was going to shut down at the end of December.
03:40 And our thinking at the time was that, well, we know this platform.
03:44 We know how much effort has gone into building it.
03:48 We know how it works. We know how well it fits into what DMI does.
03:53 And so if there is an opportunity to acquire the assets and acquire the platform at a time when they were going to shut down anyway, then that was something worth doing.
04:05 And so we we engaged with the Zest leadership in early December 2023.
04:13 And I say that in it's it's quite a testament to how well the two teams work together,
04:26 that we essentially stitched the contours of a deal, I think, maybe in 48 hours.
04:32 And then, of course, over the next next set of weeks, we needed to stitch the deal together much more fully.
04:41 They needed to get all their stakeholders on board.
04:45 I mean, they have a bunch of different stakeholders at the time, secured creditors, unsecured creditors, shareholders, lenders on that platform.
04:55 And so they needed to get all of that stitched together. And that's what took the balance of the time.
05:01 But the contours of the deal came together, I would say, in about 48 hours.
05:08 That's super impressive, actually, to seal the deal in that amount of time.
05:15 Shivashish, next, I'd like to talk to you about a bit on how the Zest brands will live on.
05:22 The press release mentioned that you now hold exclusive rights to all these brands.
05:27 How will we see them in what way, shape or form will we see them?
05:31 Apart from the checkout financing platform that you've already mentioned, will we see the Zest logo and the green and the white colors?
05:40 Yeah, I mean, at this point, there is no reason for us to think that that will not be the case.
05:45 We have acquired the brand. We own exclusive rights to it.
05:50 Zest money has obviously spent many years and a lot of money in building up that brand.
05:56 And so it makes a lot of sense for us to continue the brand as the customer facing brand with DMI as the back end lender.
06:05 Historically, DMI has been a purely a B2B to C business.
06:11 We work with partners, we work with channels. And Zest was one of the channels that was part of our B2B to C stable.
06:18 And so, yes, I think it's fair to say that at this point, you should expect to see the Zest logo continue, the Zest brand continue,
06:28 the green and white logo that we see on checkout financing, that we see on merchant financing.
06:36 All of that should continue at this point.
06:42 Super. Lastly, Shivashish, are there any terms of the deal that you can disclose?
06:47 I know you didn't speak much in the press release, but still, I'd like to ask if it is 100 percent stake that you've purchased or is it a majority stake?
06:59 And if any numbers you can throw out for our viewers.
07:05 So one thing that I do want to make clear is that we have acquired assets from Camden,
07:14 which is which which used to own the Zest Money brand and the Zest Money technology.
07:20 We have not acquired equity in in the company.
07:26 And so in terms of the terms of the deal, I think it is important to realize that the difference is that we have not acquired the company.
07:35 We have bought assets from the company and we have an exclusive right to continue working with the company and the platform as the preferred lender on the back end.
07:47 So going forward, what we expect to see and what we hope to see out of this is Zest has a stable of products that fit very well into what we do.
07:58 It is complementary to what we do. We have as D.I.
08:04 We focus a lot on younger borrowers, on younger consumers.
08:09 We focus a lot on on financial inclusion, tier two, tier three cities and our current stable of products prior to the Zest Money brand and technology acquisition was basically personal loans and consumption loans.
08:25 Now, what Zest allows us to do is take not just their customer base and continue providing them with a credit home,
08:33 but taking our customer base and give them the opportunity to transact on the Zest platform.
08:42 And the Zest platform is basically, if you think about it, it's all of e-commerce.
08:47 It is a large number of roughly 15,000 live and active offline merchant networks.
08:54 And so. It allows us to take our, you know, roughly 20 million customer base and offer them access to the to the Zest platform as well.
09:06 So all in all, I expect that this is going to be extremely value accretive to to DMI and hopefully it'll be value accretive to Zest's employees
09:19 who should continue to see, you know, significant work on their platform.
09:30 Interesting. So it's not a equity based deal. So you won't be taking on any of the losses and the liabilities that are on Camden's balance sheet.
09:38 It's purely an asset transaction that you've done, right, Shivashish?
09:44 Yeah. So we have not purchased the equity of Camden. We have we have purchased assets from Camden.
09:51 Got it. Got it. Shivashish, my last question.
09:58 What happens to the current employee base that Zest money has?
10:02 What sort of do you absorb them or what is the status of that currently?
10:09 So I think that the employee base should feel comfortable continuing to remain employees of Zest.
10:16 I mean, I know that in times like this, there is a lot of uncertainty, a lot of anxiety.
10:23 But what I can say is that we have come into this with the intention of supporting Zest as a platform,
10:33 with the intention of supporting Zest's employees as employees of Zest.
10:37 And the Zest platform obviously needs its employees to continue functioning the way it has.
10:45 So where I think the future for Zest employees goes is that the transaction that DMI has done should significantly shorten the time that it takes Zest to become profitable on a standalone basis.
11:04 And we think that there are significant synergies that we bring to the table in terms of costs that we can save them,
11:13 both on the balance sheet side and in terms of operational expenses.
11:17 And we expect that in a relatively short period of time, in a matter of a handful of months,
11:23 I would say that the platform should become sustainable on a standalone basis because it is profitable on an operating basis.
11:31 And at that point, I think there is a lot of leeway for both the platform and the employees to grow into their new role
11:42 and hopefully get the benefit of everything that they have built over the last six or seven years.
11:47 Superb. Thanks so much, Subhashish, for throwing light on this acquisition that you've made.
11:58 Viewers, this was Subhashish Chatterjee of DMI Finance talking about the Zest money acquisition. Stay tuned.
12:05 [Music]