ZoodPay, a provider of buy now, pay later (BNPL) services in the Middle East and Central Asia region, has acquired Tez Financial Services.
The Deal: ZoodPay did not disclose the amount it paid for Tez.
Valuation (estimate): Tez had previously raised $1.1 million in seed funding from Planet N, Flourish (Omidyar Network), and Accion Venture Lab.
Typically, startups give up 25% – 35% of equity during the early stages.
It is possible that Tez had a valuation between $3 and $4.5 million prior to the acquisition, assuming a priced seed round.
Tell me more: Tez offers loans to non-banked and underbanked people in Pakistan.
Individuals can borrow up to PKR 10,000 ($50) and repay it in installments.
It was founded in 2018 by Nadeem Hussain, Naureen Hyat, and Humza Hussain.
Make it make sense: ZoodPay operates in Jordan, Iraq, Lebanon, Uzbekistan, Kazakhstan, and now Pakistan.
To date, it has raised $48 million in disclosed funding.
Its services include ZoodMall, a mobile-only B2C e-commerce platform, and ZoodPay, a BNPL payment solution.
With this acquisition, ZoodPay is establishing itself to become the dominant player in Pakistan’s digital lending and fintech space.
That’s because, in 2018, Tez became the first Fintech in Pakistan to be granted a Non-Bank Financial Company (NBFC) license.
With over 160 branches across Pakistan, it has carved out a specialized niche in consumer lending for the unbanked and underbanked.
Between the lines: It’s not clear if ZoodPay will be introducing its BNPL services in Pakistan.
Tez currently doesn’t engage in providing BNPL services or e-commerce in Pakistan.
However, it does lend to consumers and claims to have developed proprietary credit scoring algorithms based on alternative data.
Technology may have been a factor in ZoodPay’s interest in acquiring Tez.
Big Picture: Tez is the first known fintech acquisition in Pakistan’s startup ecosystem. This is a great signal for fintech startups in the country.
