Pine Labs Raises $600 Mn Funding Led By Fidelity, BlackRock

IPO-bound merchant commerce platform Pine Labs today announced a $600 Mn investment round with the entry of new investors Fidelity Management & Research Company, funds managed by BlackRock, Ishana and Tree Line among others. 

A fund advised by Neuberger Berman Group LLC, IIFL AMC via its ‘Late-Stage Tech Fund’ and Kotak are also participating in this investment round. The investment is subject to approval from the Securities and Exchange Board of India (SEBI), said the company.

It had last raised $285 Mn in May 2021, which valued it at $3 Bn, in a venture round from the likes of Baron Capital Group, Duro Capital, Marshall Wace, Moore Strategic Ventures, Ward Ferry Management and existing investors Temasek, Lone Pine Capital and Sunley House Capital. 

Founded in 1998 by Lokvir Kapoor, Pine Labs enables businesses to accept online and offline digital retail transactions. The startup, which is also backed by Sequoia Capital, Actis, PayPal and Mastercard amongst other leading global investors, claims that its cloud-based platform powers over  140,000 merchants, 3.5 lakh PoS (point of sale) terminals across 3,700 cities and towns in India and Malaysia. 

“Over the last year, Pine Labs has made significant progress in its offline to online strategy in India and the direct-to-consumer play in Southeast Asia. Our full-stack approach to payments and merchant commerce has allowed us to grow in-month merchant partnerships by nearly 100% over the last year. We are excited to bring on board a marquee set of new investors in this round and appreciate the confidence they have placed on the Pine Labs business model and our growth momentum,” said B Amrish Rau, CEO, Pine Labs.

The startup offers digital solutions for the checkout point, enabling transactions from billing to payments and reconciliation and collects fees from banks and merchants for using its software solutions.

“Pine Labs has rapidly transformed from a single product company allowing retail acceptance of payments to a broader payments platform. The company now serves hundreds of thousands of merchants across payments acceptance on cards and UPI processing tens of billions of payment volumes. The company also has the market leading PayLater offering with almost $3 Bn in annualized PayLater transactions,” said Shailendra Singh, MD, Sequoia Capital.

The Pine Labs Journey So Far

Delhi-NCR-based Pine Labs had reported revenue growth of 43%, from INR 491.29 Cr in FY2019 to INR 701.62 Cr in FY2020. But the spike in revenue came at the cost of rising losses as the company’s expenses grew 56%, from INR 490.86 Cr to INR 765.61 Cr in the same time period. Its losses increased by 1,654%, from INR 3.29 Cr in FY2019 to INR 57.72 Cr in FY2020.

Pine Labs continues to be well-financed and has its earnings before interest, tax, depreciation and amortisation (EBITDA) profitable for several years, said the company in a statement today. 

  The recent funding announcements come on the heels of its IPO plans, reported earlier this year. Pine Labs is looking to hit the US public market by March 2022 and has reportedly begun early-stage discussions with at least four merchant bankers like JP Morgan, Citi and Morgan Stanley to work on its initial public offer (IPO). Pine Labs plans to hit a $5 Bn valuation with this IPO, however, the plans could change as the discussions progress.

Meanwhile, Pine Labs has been expanding its product and market reach in the run-up to the IPO. Pine Labs has recently acquired Kuala Lumpur-based payments and discovery platform Fave in a deal worth $45 Mn. With the acquisition, Pine Labs will look to build a consumer-centric vertical for discounts and discovery in India and Southeast Asian countries such as Malaysia, Singapore and Indonesia, where Fave has a presence. Fave will also launch its payments app in India, which will allow customers to transact at nearly 5 Lakh retail points and merchants using Pine Labs’ payment solutions. Over 6 million consumers across over 40,000 merchant establishments currently have access to the Fave app.