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May 17, 2021

Pine Labs triples valuation on the back of $285m funding round

By Eric Johansson

Merchant commerce platform Pine Labs has tripled its valuation over the past year after announcing the first close of its $285m funding round that pushed its valuation to $3bn.

The Indian fintech firm had achieved a $1bn valuation on the back of Mastercard injecting an undisclosed amount into the company at the start of 2020. Lone Pine Capital then topped up Pine Labs’ coffers in December, pushing its valuation past the $2bn mark.

Founded in 1998, Pine Labs today serves more than 150,000 merchants across Asia and the Middle East. The platform essentially provides the same type of services as payments processing leviathans Stripe and PayPal or Apple Pay for merchants.

In other words, it provides payment solutions both online and offline. Pine Labs’ in-store payment dongle Plutus Smart pretty much works the same way as Square’s card readers.

The crowded market means that there clearly is a massive opportunity for fintech firms, but it also means that – as for many other smaller companies – Pine Labs will sooner or later have to face off against some major Big Tech firms, particularly as investment in the South East Asian digital economy is gaining momentum.

This latest round will certainly provide Pine Labs with the financial muscle needed to hold its ground as the behemoths of Silicon Valley start to circle around the region.

New investors Baron Capital Group, Duro Capital, Marshall Wace, Moore Strategic Ventures and Ward Ferry Management backed the new $285m funding round. Existing investors Temasek, Lone Pine Capital and Sunley House Capital also participated in what Pine Labs refers to as the “significantly oversubscribed” funding round.

“This is an exciting phase in our journey as we enter newer markets,” said B. Amrish Rau, CEO at Pine Labs. “We excel in enterprise merchant payments and now want to scale new frontiers in the online space as well, (and) at the same time continue to power the credit and commerce needs of our offline merchant partners.”

The round also follows from Pine Labs’ recent $45m acquisition of payments app Fave in April this year and the $110m purchase of Indian gift solutions company QwikCilver in 2019.

“Through the acquisitions of QwikCilver and Fave, Pine Labs is now the number one pre-paid issuing platform as well as the top consumer loyalty product in this market,” said Shailendra Singh, MD at Sequoia Capital. “With leadership across multiple categories, the company is very well positioned to drive immense value to its merchant partners in India and other SEA markets.”

Buy-now-pay-later ambitions

Pine Labs has recently made forays into the highly profitable buy-now-pay-later (BNPL) segment of the fintech industry. In March it announced plans to launch instalments payments in Malaysia after claiming to have secured a 95% market share in India.

The venture had rolled out its BNPL service in India in early 2020 in partnership with Mastercard. The fintech has announced similar planned rollouts in Thailand, the Philippines, Vietnam and Singapore.

The BNPL space has grown lucrative over the last decade. However, the market segment’s growth accelerated tremendously in 2020 as many shoppers migrated online and started adopting payment instalment solutions. In the UK, BNPL transactions quadrupled last year.

The worldwide sector is expected to be worth $166bn by 2023, according to GlobalData Thematic Research.

For companies like Australian Afterpay, UK startup Zilch and Swedish Klarna, which picked up a $31bn valuation in March, the pandemic has been a massive opportunity. PayPal and other fintechs who’d previously not provided BNPL solutions have also introduced their own BNPL solutions. Pine Labs looking for its own slice of the BNPL market is therefore a logical step in its own expansion.

Verdict deals analysis methodology

This analysis considers only announced and completed deals from the GlobalData financial deals database and excludes all terminated and rumoured deals. Country and industry are defined according to the headquarters and dominant industry of the target firm. The term ‘acquisition’ refers to both completed deals and those in the bidding stage.

GlobalData tracks real-time data concerning all merger and acquisition, private equity/venture capital and asset transaction activity around the world from thousands of company websites and other reliable sources.

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