Namaste, Sat Sri Akaal, and Salaam. 🫡

Happy morning, folks. 🙏

Today we’re diving into -
- ZestMoney’s million-dollar rollercoaster ride,
- the Patel Motel Cartel’s 50% monopoly,
- And GQG’s double-down on Adani Power.

Our read time today is 4 minutes and 38 seconds - faster than you can grab a plate of Jodhpuri mirchi badas (plus spicy chutney obviously). 🔥

Let's dive in. 👇

Market Vibe Check

ZestMoney scoops up $7 million more to stay alive. 😷

TLDR -
- ZestMoney is a BNPL startup that’s gone from $300mn → struggling for survival.
- They just raised $7 million in cash to keep the office lights on.
- Their default rate is ~13% while a healthy default rate is 2.5%

ZestMoney was once a $300 million dollar poster-boy for the Indian BNPL scene.

Yesterday, they had to go back to existing investors and raise $7mn of cash to keep their business alive.

This is how their business works -
- Say you want to buy a 10,000 Rs phone from Apple (lol)
- ZM breaks that 10,000 bill into 4 instalments of 2,500 Rs
- ZM then pays Apple their 10,000 Rs. upfront
- Ramesh pays ZM 2,500 Rs a month for the next 4 months
- Apple gives a 5-10% commission of the phone’s value to ZM for bringing them a new customer

Despite all the VC jargon and hawabaazi, this is a classic, pure-play lending business.

And in lending, the ONLY number you need complete control on is your default rate - the percentage of customers that take a loan from you but don’t repay it.

A healthy BNPL provider maintains that default rate at 2-3%.

But ZestMoney’s default rate is close to 14%.

So for them to make money from a customer, they need the customer to make 4+ purchases a year, while the average customer only makes 2.

Add in a (relatively) absurd customer acquisition cost of Rs. 1,000, and you have a recipe for disaster.

Round trip… to the moon & back.

Patel Cartel grabs a 50% monopoly in the motel market. 🏘️

TLDR -
- Indian-Americans now own 50%+ of all motels in the USA.
- Of this, over 70% are Gujarati by ethnicity.
- They generate $40bn in combined revenue/year with over 800k employees.

Long highways + car culture has turned America into a big-time motel market.

And no one’s benefitting from this like Indians are.

Indian-Americans now own over 50% of motel properties across the USA and do an estimated $40 billion in top-line every year.

The reason this works brilliantly in the Indian community -
- Patelbhai will take out a mortgage to buy a 20-room motel complex
- He will live in 2 of the rooms with his wife and kids
- Rental income from the other 18 will take care of his living expenses + EMI + upkeep + salaries

Patelbhai is also very likely to have an incredibly strong family support system to handle the operations, and he’ll also provide brilliant customer experience since he’s literally living in the same property.

Jalebi-fafda toh banta hai. 🤷

GQG doubles down into Adani shares. ⚡

TLDR -
- Adani family has been cashing out of their shares for a few months now.
- Latest sale is a $1.1 billion block transaction in Adani Power.
- Qatar Investment Authority also interestingly bought $510mn of Adani stock earlier this month.

The world cursed Rajiv Jain for throwing a few billions at Adani when he needed it most.

Look who’s laughing now… his company has made a handsome 85% profit on their Adani shareholding and are back for more.

GQG Partners just bought out 8.1% more of the Adani Power entity thru a $1.1 billion block transaction.

This is the 2nd biggest block deal Adani has done till date.

It’s another big confidence vote, since debt markets are still giving Adani hell and bond prices have not stabilized anywhere close to where equities have.

As a wise man said… there are only 3 ways that smart young men go bankrupt.

Ladies, liquor, and leverage.

Adani baba has been leaning heavily into #3.

In other news… ☕

Argentina presidential candidate vows to shut down their central bank (BBG)

Tesla cuts prices in China to wage a price war (FT)

Friction starts heating stuff up at Lenskart (Ken)

Tencent hypes public up about “China’s best AI model” (BBG)

Elon Musk drops $10mn on a fertility research project (TC)

And that’s the tea the chai for today.

Thanks for reading, and we hope you enjoyed it. Have a mauj-masti filled day ahead.

Lots of ❤️,

Team C