ZoodPay, a Switzerland-based buy-now-pay-later platform with offices in the Middle East and Central Asia, has fully acquired Karachi-based Tez Financial Services, marking Pakistan's first M&A deal in its nascent fintech ecosystem.

The financial details of the deal were not disclosed. 

Tez Financial Services was the first fintech in Pakistan to secure a Non-Bank Financial Company (NBFC) license in 2018. The company, backed by investors including Planet N, Flourish Ventures (Omidyar Network) and Accion, provides nano-loans to the unbanked and underbanked masses across more than 160 cities in Pakistan.

Michael Khoi, CEO of ZoodPay, said: “Pakistan is a market brimming with potential given the number of people seeking access to credit facilities. By combining ZoodPay’s unique ecosystem and experience operating in frontier markets with Tez’s local know-how, strong team and ecosystem partnerships, we’ll be able to positively impact the life of Pakistani people and empower them by giving them access to easy, affordable and reliable digital financial services.”

Only less than 5% of the population in Pakistan have access to formal credit. Conventional players do not find much success in lending to the masses because of difficulties in assessing risk due to the lack of credit histories and credible data.

ZoodPay aims to address this problem by leveraging its holistic B2B2C digital-lending ecosystem, according to a statement.

ZoodPay along with Tez will provide access to affordable and flexible payment solutions to the unbanked and underbanked in Pakistan.

"This acquisition is aimed at enhancing financial inclusion for the masses by bringing together the combined strengths of ZoodPay and Tez, whereby ZoodPay brings its execution ability from regional markets with almost 10 million users across five countries and Tez brings deep insights into digital lending with a successful track record in mitigating default levels," Naureen Hyat, co-founder of Tez Financial Services told Zawya.

Besides lining up services for the unbanked and underbanked individuals, the company also plans to provide a suite of lending solutions to SMEs and customers of SMEs supplemented by logistics management, flexible payment options and a diverse distribution network of merchants and partners.

"We aim to grow at a rate of 30% month-on-month this year and build upon our momentum by adding the Virtual Installment Card and additional lending solutions to the suite. The focus for us is responsible growth ensuring a balance between scale and credit risk," Naureen said.

ZoodPay had raised close to $50 million from Zain Ventures and Sturgeon Capital. It has started its Series C and part of the proceeds will be used for ZoodPay’s expansion into Pakistan. Currently, the company operates in Joran, Iraq, Lebanon, Uzbekistan, and Kazakhstan.

(Reporting by Seban Scaria; editing by Daniel Luiz)

seban.scaria@lseg.com )