Pine Labs Takes Another Step Towards Moving Base To India, Gets Initial Nod From NCLT

Taking another step towards shifting its base to India, fintech startup Pine Labs has secured the initial set of approvals from the National Company Law Tribunal (NCLT) to merge its Singapore entity with its Indian subsidiary. 

In an order dated August 12, the Chandigarh bench of the NCLT said, “… The first motion application stands allowed by giving liberty to the applicant company to file (a) second motion petition…”.

Simply put, the tribunal has disposed of the company’s first motion application, which involves the entity approaching the NCLT to announce its intention to proceed with the merger. Once the plea is admitted, the tribunal directs the applicant to seek additional approvals, such as shareholder approval and other clearances from relevant authorities. 

This paves the way for Pine Labs to file a second motion plea and approach the Ministry of Corporate Affairs (MCA), Registrar of Companies (RoC), the Reserve Bank of India, and other government authorities for further approvals. 

In addition, the NCLT has directed the fintech startup to convene a meeting of its equity shareholders on September 28 to vote on the matter. “The quorum of the meeting of the equity shareholders shall be 4 in number or 40% in value of the equity shareholders,” read the NCLT order. 

While the tribunal has allowed the company to dispense with the meeting of secured creditors on account of the submission of their approvals, it has, however, told Pine Labs to hold a meeting of its unsecured lenders on September 28 as well to seek their approval.

In its plea, Pine Labs said that the proposed amalgamation would allow it to “achieve business synergies and more economies of scale”.

“The proposed Amalgamation is expected to achieve cost savings from more focused operational efforts, rationalisation and standardisation of business processes by way of consolidation of the group,” read the order. 

The order further noted, “The proposed amalgamation will lead to a reduction in overheads including administrative, statutory compliances and will improve efficiency and enable the Group to optimally allocate and utilise resources by avoiding duplication between India and Singapore.”

This comes three months after the company received approval from a Singapore court to merge its Singapore-based entity with the Indian entity. The court then greenlit the Singapore-based entity’s plea to transfer all assets and properties to the Indian entity.

Founded in 1998 by Lokvir Kapoor, Rajul Garg, and Tarun Upadhyay, Pine Labs offers digital payment solutions such as point of sales (PoS) devices and payment systems to merchants. It also offers other solutions like pay later and rewards and cashback to businesses.

Pine Labs saw its net loss more than double year-on-year (YoY) to INR 56.2 Cr in the financial year 2022-23 (FY23). Revenue jumped 37% to INR 1,280.5 Cr during the year under review from INR 932.3 Cr in FY22.

Desh Wapsi For Pine Labs 

The directions from the NCLT comes five months after the Chandigarh bench of the tribunal admitted Pine Labs’ petition to merge the two companies in March this year under sections 230, 232 and 234 of the Companies Act, 2013 as well as other provisions of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016.

After nine rounds of hearings, the case was eventually disposed of on August 12. 

The startup moved the NCLT after it sought board approval, earlier this year, to move its parent company from Singapore to India. At the time, Pine Labs was reportedly eyeing moving its domicile to India by the end of 2024. 

With this, Pine Labs has become the latest Indian startup to set in motion plans to shift its base to India. While fintech giants such as PhonePe and Groww have already reverse flipped to India, the likes of Zepto, Razorpay, and Flipkart are also mulling such a move.

The rationale behind the move back to India is likely led by considerations around initial public offering (IPO). In June this year, reports surfaced that Pine Labs was eyeing a $1 Bn public listing in India at a valuation of over $6 Bn.

However, this is not the first time that the fintech startup has lined up plans to list on the bourses. Notably, it converted its Singapore-based parent entity to a public limited company in September 2021. At the time, it was eyeing a $1 Bn IPO in the US in 2022. 

However, the company eventually deferred the plans in 2023 as adverse market conditions and funding drought wreaked havoc globally. But as macroeconomic factors improve, more and more Indian new-age tech companies are looking at IPOs this year. 

So far in 2024, 10 companies have listed on the stock exchanges including the likes of Ola Electric, FirstCry, Unicommerce, TBO Tek, and Go Digit.