Merchant commerce platform Pine Labs, which was mulling an initial public offer (IPO) in the US early this year, may defer the process till later this year due to "weak market sentiments", two persons familiar with the development told VCCircle.
The payment solutions provider was planning to launch its Nasdaq listing process in January-February, and had hired Goldman Sachs and Morgan Stanley to formalise the process. However, it may now postpone the IPO launch till end of the current year or even early 2023 due to unfavourable market conditions, and instead focus on international expansion to add on revenue and better its margins, both the above-cited individuals said on condition of anonymity.
The domestic market accounts for over 90% of Pine Labs’ business, hence the company is eyeing expansion into geographies such as South East Asia, Malaysia and Middle East to position itself as cross-border platform too in a bid to improve its prospects at the time of IPO, both persons said. It may also likely to scout for acquisitions in those geographies.
While an email query to Pine Labs went unanswered till press time, Goldman Sachs declined to comment on the development.
Pine Labs is said to be clocking around $100-110 million (Rs 750-825 crore) in revenue and with that scale it will be difficult to command the targeted $6-7 billion valuation during public market debut, the persons explained.
Last week, the company announced that it had raised $150 million, or about Rs 1,120 crore, in a fresh round of funding from Alpha Wave Ventures. The company, as per an Economic Times report, was valued at around $5 billion in that transaction. VCCircle could not independently confirm the figure.
Some of the heavily-funded startups in the payments space have been witnessing a huge jump in their fortune in subsequent rounds. While Razorpay is now valued at $7.5 billion--a seven-fold rise since the start of 2021, BharatPe is valued at about $2.85 billion.
Interestingly, Paytm, which was once the highest valued fintech startup in India, has seen its worth tumbling after its poor public market debut. As on the close of trading on BSE on February 25, Paytm was valued at $6.83 billion--a steep decline from little over $16 billion that it achieved in November 2019.
Pine Labs’ solutions are used by merchants from diverse sectors—electronics, food and beverage, fashion, pharmacy, telecom and airlines, but these are mostly offline players. The company is also planning to ramp up its online platform, both by organic and inorganic means.
The persons cited above added it will be difficult to grow organically as PayU owned BillDesk holds the majority of the market in business-to-business(B2B) payments space and rest is overcrowded with fringe players, they added.
In May 2021, the company raised tranche of $285 million from a clutch of reputed public market-focused cross-over funds, pushing its valuation to around $3 billion. In August 2021, Pine Labs roped in CRED founder Kunal Shah on its board.
In 2021, Pine Labs raised a total of $600 million from US-based asset management firm Fidelity, Blackrock and others, followed by a $100 million fundraise from US-based Invesco Developing Markets Fund.
Rajul Garg launched Pine Labs in 1998 but left the firm in 2003. Lokvir Kapoor, the company's current chairman, then took over the payments company. Before moving to its present business strategy, it concentrated on large-scale smart card-based payments and loyalty solutions for Indian metro enterprises.
The fintech major has also struck a few acquisitions in the recent past. Early this month, it acquired out payments startup Qfix Infocomm, for an undisclosed amount.
Mint also reported that Pine Labs is in advanced negotiations to acquire API infrastructure company Setu. In the past Pine Labs has acquired Southeast Asia-based fintech platform Fave for $45 million (Rs 337 crore) in April 2021. In July 2020, Pine Labs made a strategic investment in Fave.
Pine Labs acquired QwikCilver in 2019 for which it raised capital from Actis Advisors.