(Reuters) -Australian buy-now-pay-later (BNPL) firm Zip Co Ltd said on Wednesday it would invest $50 million to acquire a minority interest in Indian peer, ZestMoney, as part of its plans to tap new growth markets and add investors.
The investment comes at a time of increasing popularity of the BNPL sector, where customers pay in instalments without any interest for their online purchases, as the COVID-19 pandemic pushed young shoppers to look for easier access to credit.
Zip, Australia’s second-biggest BNPL player, is expanding its footprint in the rapidly growing sector, acquiring companies in Europe and the Middle East over the past one year.
Its investment in Bengaluru, India-based fintech ZestMoney marks its entry into a market with a massive young demographic, which is gravitating more towards cash-less payments and has a huge growth potential in the BNPL and e-commerce space.
“With deep partnerships with online and offline merchants and lending partners, ZestMoney is poised to accelerate growth as the market develops,” Zip Chief Executive Officer Larry Diamond said.
Zip said it had negotiated terms to increase its shareholding in ZestMoney over time.
The BNPL space saw established players testing newer areas of business to power growth, with Australian BNPL giant Afterpay getting a $29 billion offer from Square Inc, and U.S. payments giant PayPal acquiring a Japanese firm for $2.7 billion.
(Reporting by Sameer Manekar in Bengaluru, Editing by Sherry Jacob-Phillips)
