Fidelity, BlackRock lead Pine Labs’ $600m funding at $3bn valuation ahead of US IPO

FinTech unicorn Pine Labs closed an investment round of $600m led by Fidelity Management & Research Company and BlackRock Inc. 

Other investors participating in the round include a fund advised by Neuberger Berman Investment Advisers LLC, Ishana, Tree Line, IIFL AMC via its ‘Late-Stage Tech Fund’, and Kotak.

This investment round is subject to approval from the Securities and Exchange Board of India (SEBI), the company said. Backed by Sequoia Capital, Temasek Holdings, Actis, PayPal, and Mastercard among other leading global investors, the Singapore-based startup is valued at $3bn, said Pine Labs CEO Amrish Rau.

The funding comes a month after the company raised $285m from public market investors, including Baron Capital Group, Duro Capital, Marshall Wace, Moore Strategic Ventures and Ward Ferry Management.

With this fund raise, the company is looking to list in the US markets in the next 18 months. Pine Labs wants to become the first Indian FinTech to list offshore, with the right unit economics and Ebitda profile, while recording 50-60% revenue growth year-on-year.

Pine Labs will invest the fresh capital to scale its software commerce stack, which allows merchants to automate payment and billing services at storefronts. It also plans to bring its offline tech and payments capabilities for small merchants to online channels as well. This means Pine Labs is also building payment gateway services, which will allow merchants to also digitise their delivery and ledger services.

Furthermore, Pine Labs is processing an annualised gross transaction value (GTV) of $1bn through these stickers—both in physical and digital forms. Typically, these modes of payments are used by UPI players such as Google Pay and PhonePe.

The company is eyeing an additional fundraise by the end of 2021, as it looks to expand into new geographies of the Middle East by early next year.

Pine Labs provides a range of financial services, including point-of-sale devices, merchant commerce, and financing. It has a presence in India, South East Asia, and the Middle East. It also offers a range of customised offerings for in-store and doorstep payments, ‘Pay Later’ at the point of sale, prepaid issuance and online payments to large, mid-market and small retailers.

It powers close to 1 billion online transactions every month and this number will grow to almost 10 billion in 12 months.

Rau said, “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.

Echoing the same bullishness in the company, Sequoia Capital MD Shailendra Singh said Pine Labs had rapidly transformed from a single product company allowing retail acceptance of payments to a broader payments platform. He added, “The company now serves hundreds of thousands of merchants across payments acceptance on cards and UPI processing tens of billions of payment volume; the company also has the market-leading PayLater offering with ~$3B in annualised PayLater transactions.”

The startup acquired pay-and-save app Fave in April 2021 for $45m. That app now has six million users and more than 40,000 merchants. The Fave acquisition allowed Pine Labs to enter the consumer payments segment, as it looks to offer Unified Payments Interface (UPI)-based payments and cashback to Indian customers. Through Fave, Pine Labs is also strengthening its play in the Southeast Asian markets.

Copyright © 2021 FinTech Global

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