Pine Labs, the largest POS player, which processes $30 billion of payments annually, on Tuesday raised a fresh $315 million in funding led by new investors Fidelity Management and Research Company and BlackRock as part of its ongoing financial round. With the latest tranche, the company has closed the investment round, taking the total size of the funding to $600 million. The fintech start-up’s valuation stands at $3 billion after the fundraise.
Ishana, Tree Line, Neuberger Berman Investment Advisers, IIFL AMC and Kotak are the other new investors. IIFL AMC routed its investment via its late-stage tech fund, Pine Labs said in a statement on Tuesday.
Pine Labs represents 14% of card spends through a network of 600,000 POS machines and its cloud-based SaaS platform, Plutus, supports payments across different modes, including gift cards, loyalty points, and on credit (EMI) by integrating multiple issuer and acquirer banks on a single platform.
Typically, Pine Labs’ target segments are large merchants compared with SMEs for its peers. Its business model consists of fixed rental for POS machines and bundling value-added services (analytics, billing and reconciliation, EMI financing, loyalty programmes, etc).
The Noida-based firm had kick-started the financial round in May with a $285-million fundraise from a clutch of investors including Baron Capital Group and Moore Strategic Ventures. Pine Labs said it “continues to be well financed and has been Ebitda profitable for several years”.
The company that counts Sequoia Capital, Temasek Holdings, PayPal and Mastercard among its other backers is gearing up for a possible US listing in the next 18 months, joining a spate of Indian startups that are chalking out plans to go public.
Pine Labs is virtually the only player in gift card management in India with more than 95% market share. It has also become a dominant player in offline POS consumer durable financing with 90% market share outside of Bajaj Finance, wherein it offers EMIs in tie up with 120+ brands, 35+ lenders, and 150,000 merchants for fees. It enables its banking partners to offer no-interest EMIs to not just credit card users but also debit card customers. Its buy now pay later (BNPL) has scaled to disburse $2 billion of consumer loans (no-interest EMIs) in FY20 with ATS of `25,000 in India and plans to expand the offering to five Southeast Asian markets in 2021.
It earns commissions of up to 0.5% of the transaction value from the lender as origination fees in addition to payment-linked
fee from the merchant.
Pine Labs also provides short-term (up to 90 days) financing to merchants for working capital and inventory and is partnering with NBFCs to provide retailers access to easy and collateral-free business loans. Merchants have the option to repay these loans by choosing a flexible amount from daily card sales on Pine Labs’ PoS terminal. It is also working to build a neo-banking platform for its merchants through which it plans to embed all banking services in partnership with a bank.
“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,” CEO B Amrish Rau said.
The size of the Indian fintech market stood at an estimated `1.9 trillion as of 2019 and the segment is projected to grow at a 22.7% CAGR during 2020-25, analysts at EY said in a report published in March. India and China accounted for the highest fintech adoption rate in the world’s emerging markets as of March 2020. India had an adoption rate of 87% against the global average of 64%, they said.