Pine Labs targets IPO in 18 months raises $600 m in funding

Pine Labs, leading Indian payments and ecommerce start-up, closed a whopping $600 million financing round as it sets to enter the public market foray in two years. This was courtesy of the entry of new investors, which is subject to approval from SEBI.

The key investors include:

• Fidelity Management and Research Company
• Funds managed by Tree Line, Ishana, and BlackRock
• IIFL AMC
• Kotak
• A fund advised by Neuberger Berman Investment Advisers LLC

With this current close, Pine Labs’ valuation stands at nearly $3 billion.

It also makes the company one of the highest-valued and most well-capitalised firms in the Indian fintech sector. Paytm and Walmart-backed PhonePe are the ones ahead of Pine Labs.

Pine Labs speaks

As the company plans its initial public offering in the next 18 months, some major takeaways from its statements are:

• The company continues to be well-financed, and its EBITDA is profitable for several years now.
• Leading global investors like Sequoia Capital, Actis, PayPal, Temasek Holdings, and Mastercard to continue backing Pine Labs.
• The company is eyeing US IPO as well in the next year and a half.
• It is looking to expand in Southeast Asian markets like Singapore, Indonesia, and Malaysia, alongside the Indian market.
• Pine Labs to establish scale amid the increasing demand for billing and invoice management services.
• During the pandemic, merchant sign-ups doubled regarding monthly deployments, as Indians continued to adopt digitalised solutions for various services.
• The start-up will not pursue a non-banking financial company NBFC license as it is not looking to compete with its banking partners.

However, it has applied in partnership with Amazon, ICICI Bank, Axis Bank, BillDesk and Visa, for a new umbrella entity (NUE) license.

About Pine Labs

Pine Labs specialises in the development of software and solutions for point-of-sale devices.

The company is also diversifying its catalogue with enterprise solutions like

• “Buy now pay later” (BNPL) integrations
• Payment gateway
• Invoice management
• Prepaid card insurance on its newly developed software platform

The company plans to focus on some key areas and inject fresh capital to achieve sustained growth in FY2022.

What lies ahead for Pine Labs?

According to CEO Rau, merchants are not only going for payments but different levels of digitalisation for offline and online channels.

Therefore, the firm aims to take its technology stack to small-scale merchants and traders. They have identified five focus areas to achieve the same.

1. The first focus on their list is scaling their software commerce stack that allows merchants to automate payment and billing services at the storefront.
2. Next in priority is bringing its offline tech and payment capabilities to online channels for small merchants. This indicates the firm is working on building payment gateway services, which will also help them with digitalised delivery and ledger services. In fact, the CEO clarifies that merchants want their offline and online payment providers to be the same.
3. QR-based solutions are Pine Labs’ next focus point. The company is processing annualised gross transaction value (GTV) of $1 billion through stickers – including physical and digital forms. These modes of payments are beneficial for UPI service providers like Google Pay, PhonePe, etc.
4. Pine Labs will also focus on the expansion of its BNPL and consumer touchpoints in Southeast Asian markets. Its recent acquisition of the Kuala-Lumpur based fintech Fave is only a step forward in this direction. Fave is also entering the Indian market as Pine Labs’ consumer-focused entity and is going to launch an app to onboard customers in the latter half of 2021.
5. The final area of focus for Pine Labs is issuing prepaid cards through Qwickcilver, one of its subsidiaries. Issuing over 8 million prepaid cards through its platform, it focuses on gift vouchers, corporate offerings, and refunds.

Parting thoughts

With net revenue of nearly Rs. 800 crores in FY21 and positive EBITDA coupled with a change in market trends due to the pandemic, another player with firepower will enter the Indian equity arena. Further, investor backing and specific areas of focus will bode well for the company as the post-pandemic unlock continues.

Frequently Asked Questions

Where is Pine Labs headquarters?

Its headquarters is in Noida, UP.

When was Pine Labs established?

It was established in 1998.

Is Pine Labs a unicorn company?

Yes, with a valuation exceeding $1 billion, Pine Labs is a unicorn company.