London-based Marshall Wace is one of the top investors participating in the new financing round of the commerce solutions provider to merchants, they said. Other new investors may also join along with existing ones, the people in the know said.
The fund infusion would mean a 50% jump in valuation of the India and South Asia-focused e-payments platform in just five months, and will catapult it right back to being one of the three most-valued fintech startups after Paytm and PhonePe, which are valued at $16 billion and $5.5 billion, respectively.
MasterCard-backed Pine Labs was
valued at $2 billion in December when it closed a $75-100 million funding round led by US-based billionaire Stephen Mandel’s hedge fund Lone Pine Capital. “The total fundraise could be $300-400 million in size and some of the final contours of the deal are being worked out currently. Pine Labs are likely to be valued in the range of $3-3.2 billion,” one person in the know told ET.
This will be Pine Labs’s second large funding after Amrish Rau — the cofounder of payments startup Citrus who went on to become PayU India CEO — joined as its chief executive in March last year.
Pine Labs did not respond to ET’s queries. A spokesperson of Marshall Wace said it does not comment on individual investments.
Growth in digital payments
The development comes at a time when digital payments continue to grow in India, aided by the Covid-19 pandemic as both consumers and small and medium enterprises have taken to e-payments quickly to avoid cash-based payments.
Digital payment providers have been quick to capitalise on the disruption wrought by the outbreak, with startups like Razorpay raising significant amounts of capital in quick succession, in the process trebling its valuation to $3 billion.
Sources said Pine Labs — a largely point-of-sale terminals business player — will use the fresh capital to double down on its buy-now-pay-later product in India and enhance its other offerings for merchants across the country as well as South Asia.
Pine Labs, company insiders said, is likely to use a three-pronged approach to spur growth in FY22.
First, it will enhance its buy-now-pay-later platform business by onboarding new retail storefronts, especially in tier II regions, while also increasing tie-ups with online retailers.
Second, the company will work to establish itself as a leading point-of-sale machine deployer, acquiring small merchants through its payment terminals.
Third, Pine Labs will eye expansion into the Southeast Asian market.
The company recently acquired Kuala Lumpur-based Fave for $45 million to leverage on local tie-ups with South Asian merchants to grow its network in the region which includes Indonesia, Malaysia, Singapore and the Philippines, seen by many as the emerging global hub of digital commerce.
It will bring Fave to India later this year and enable consumers to make payments through it across the merchant network of Pine Labs and get incentives like discounts and other deals.
Currently, Pine Labs powers close to 500,000 payment terminals across India and Malaysia in 3,700 cities. The company plans to expand its offerings to at least 200,000 new merchants across South Asia next year, a person aware of the plans added.
Pine Labs says it processes digital payments worth over $30 billion annually.
“The major focus for Pine Labs will be its buy-now-pay-later business this year, especially in India where consumers across cities are increasingly adopting digital modes of shopping,” a payments industry executive said.
Currently, its Pay Later platform has over 35 credit providers such as IDFC Capital First, Zest Money and ICICI Bank. The company has also partnered with high-end retail brands such as Croma, Samsung and Apple.
“Its eventual goal could be to integrate all its financial services offerings — including credit and insurance — to a single platform for its merchant-base through partnerships,” the person cited above added.
The Noida-based fintech platform is also learnt to have applied for a non-banking financial company (NBFC) licence to this end, the person added.
This would pit Pine Labs against several leading ecommerce and fintech companies in India such as Paytm, Amazon, PhonePe and Google for a share of India’s massive merchant credit market.