Mastercard Inc.-backed Pine Labs may defer its proposed initial share sale plan in the US till later this year as market sentiments have soured, two people familiar with the development said.
The payment solutions provider had hired Goldman Sachs and Morgan Stanley for a Nasdaq listing in either January or February. However, it may now postpone the IPO launch until the end of the current year or even early 2023 due to unfavourable market conditions and instead focus on international expansion to add on revenue and improve margins, the people said on condition of anonymity.
The company is planning to expand into southeast Asia and West Asia to position itself as a cross-border platform and cut reliance on its home market. India accounts for more than 90% of Pine Labs’ business. The planned expansion overseas will also improve the company’s IPO prospects, the people said, adding that the company may also scout for acquisitions in these markets.
While an email query to a spokesperson for Pine Labs went unanswered, a Goldman Sachs spokesperson declined to comment.
Pine Labs generates $100-110 million in revenues, and with that scale, it will be difficult to command the targeted $6-7 billion valuation during a public market debut, the people said.
Last week, Pine Labs announced that it raised $150 million in a fresh funding round from Alpha Wave Ventures. The transaction valued the company at around $5 billion, The Economic Times reported.
Some of the heavily-funded startups in the payments space have seen their fortunes soar in subsequent rounds. Razorpay, for example, is now valued at $7.5 billion, a sevenfold rise since the start of 2021, while BharatPe is valued at about $2.85 billion.
However, Paytm, the most valuable fintech startup in India until recently, has seen its worth tumble after its poor public listing. At the close of trading on 25 February, Paytm was valued at $6.83 billion, a steep decline from the about $20 billion valuation it raised funds in an IPO.
Pine Labs’ solutions are used by merchants from diverse sectors—electronics, food and beverage, fashion, pharmacy, telecom, and airlines—but they are mostly offline players. The company is also planning to ramp up its online platform by organic and inorganic means.
The people cited above added that it will be difficult to grow organically as PayU-owned BillDesk holds the majority of the market in business-to-business(B2B) payments space, and the rest is overcrowded with fringe players.
In May 2021, Pine Labs raised $285 million from a clutch of reputed public market-focused cross-over funds, pushing its valuation to around $3 billion. In August 2021, Pine Labs named CRED founder Kunal Shah on its board.
In 2021, Pine Labs raised $600 million from US-based asset management firm Fidelity, Blackrock and others, followed by a $100 million fundraising from US-based Invesco Developing Markets Fund.
Rajul Garg launched Pine Labs in 1998 but left the firm in 2003. Lokvir Kapoor, the company’s current chairman, then took over the payments company. Before moving to its present business strategy, it concentrated on large-scale smart card-based payments and loyalty solutions for Indian enterprises.
The fintech major has also made a few acquisitions in the recent past. Earlier this month, it acquired online payments startup Qfix Infocomm for an undisclosed amount.
Mint also reported that Pine Labs is in advanced talks to acquire API infrastructure firm Setu. In the past, Pine Labs acquired Southeast Asia-based fintech platform Fave for $45 million in April 2021. Pine Labs acquired QwikCilver in 2019.
