Pine Labs, a major Indian fintech company, is preparing for an initial public offering (IPO) and is expected to file its draft papers with the Securities and Exchange Board of India (SEBI) by mid-February 2025.
The company is aiming to enter the capital market by August 2025. Pine Labs is targeting a valuation of Rs 50,000 crores ($6 billion) for its IPO, with the potential to go up to Rs 70,000 crores ($8 billion). The IPO could raise approximately $1 billion. This would be the largest IPO by an Indian fintech firm since Paytm's public offering in 2021.
The IPO is expected to include a combination of fresh issue and an offer-for-sale component. Five investment banks are advising Pine Labs on its IPO: Axis Capital, Morgan Stanley, Citigroup, JP Morgan, and Jefferies. The company may also opt for a pre-IPO funding round.
Pine Labs was founded in 1998 and initially focused on point-of-sale (PoS) terminals and payment solutions, processing debit and credit card transactions. It has since expanded its services to include online payment gateways and other merchant-centric solutions, such as loyalty programs and gift cards.CEO of PineLabs Amrish Rau pointed out that Pine Labs' online business is growing rapidly, at a rate of 100% year-on-year, though it currently contributes less than 5% of the company’s overall business. The company's offline business is growing at about 20% a year. Pine Labs has also expanded internationally, with teams in California, Singapore, and Australia. The company's international business is growing at about 50% a year.
Since Amrish Rau took over as CEO in March 2020, Pine Labs has made several strategic shifts. Rau focused on building an online business, acquiring Setu, a company that helps businesses launch fintech products quickly, and bringing in a team from PayPal to build an online payment gateway. Pine Labs also acquired Qwikcilver, a gift card technology startup, which now generates 20% of its overall revenue. The company also acquired Fave, a consumer-facing fintech platform, but has since kept that business at a steady state.
Pine Labs faces increasing competition in both the online and offline payments space. While Pine Labs has a strong presence in the enterprise and mid-market segments, competitors like Paytm have expanded rapidly in the small merchant space. The company has also been slow to adopt certain technologies, such as UPI-based payments and soundboxes. Despite these challenges, Pine Labs has a diversified revenue stream and a robust business model, which may make it a less risky investment than some of its competitors. The company is also working to expand its consumer-facing business.
The company’s operations for its India entity increased by 2.8% year-on-year to ₹1,317 crore in FY24 from ₹1,281 crore in FY23. However, losses surged by approximately 233.93%, rising to ₹187 crore in FY24 from ₹56 crore in the previous fiscal year.
Pine Labs has received approval to relocate its base from Singapore to India, merging its Singapore and Indian entities. This move is crucial for the company to get listed on the Indian stock market.
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