Indian digital payments firm PhonePe has scrapped its plan to purchase buy-now-pay-later (BNPL) fintech outfit ZestMoney after months of discussions, reported The Economic Times.

The move is attributed by concerns related to due diligence.

It comes four months after various media outlets reported that PhonePe was holding talks to purchase ZestMoney in a deal valued at roughly $200m to $300m.

A person privy to the development was quoted by Moneycontrol as saying: “The deal has been called off.

“There are some issues over due diligence and as of now, PhonePe is not going ahead with it.”

Representatives from both PhonePe and ZestMoney are yet to make any comment over the matter.

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By GlobalData

The deal would have allowed PhonePe, which currently offers insurance, mutual fund distribution and other services, to foray into the digital lending sector.

Two weeks back, the firm garnered a further $200m in capital from its backer Walmart, at a pre-money valuation of $12bn.

PhonePe’s latest decision comes as a setback for ZestMoney as it is struggling to raise funds.

After its latest Series C funding round extension in September last year, ZestMoney was valued at $470m, which is much less than the acquisition amount offered by PhonePe.

Founded in 2015, the BNPL outfit has been searching for a buyer for at least a year.

So far, the company has raised around $140m from multiple investors, including PayU, Zip, Ribbit Capital, Xiaomi, Goldman Sachs, among others.