Pine Labs secures $125 mn from Temasek, PayPal

Singapore state investment firm Temasek and American payments giant PayPal Holdings Inc. have invested a total of $125 million (Rs 843 crore) in Indian digital retail payments platform Pine Labs.

“We’re teaming up with Temasek and PayPal at a time when the Indian payments market is at an inflexion point,” Lokvir Kapoor, founder of Pine Labs, said in a statement.

The funds will help Pine Labs expand its presence in the country and further develop its product suite, the statement added.

The investment comes barely two months after private equity firm Actis Capital led an $82-million (Rs 530 crore) round into Pine Labs in March. 

Pine Labs declined to give details about the primary and secondary break up of capital and its valuation from the current fundraise. But the investment from Actis Capital valued the company at $900 million, making it a potential candidate to enter the coveted unicorn club, an industry term referring to startups valued at more than $1 billion.

Sequoia India, which first invested in Pine Labs in 2009, remains the company’s largest shareholder, the statement said. In August last year, The Economic Times had reported that the venture capital firm was exploring the sale of its stake in Pine Labs. At that time, Kapoor said the firm was looking to raise $100 million to expand its operations.

However, Pine Labs, in the strictest sense, is not a startup. It has been around for almost 20 years, going through a change in business model, ownership and management. Since its entry into the payments space in 2009, Pine Labs has had to continuously evolve itself to the changing retail landscape. Today, the firm is looking to scale its operations to the next level with overseas expansion plans. In December 2017, it entered the Malaysian market partnering with one of the leading banks of the country.

Run by Pine Labs Pvt. Ltd, the firm was founded in 1998 by Rajul Garg, who quit the company in 2003. The payments company was then taken over by incumbent CEO Kapoor. Initially, it focused on large-scale smart card-based payment and loyalty solutions for Indian petro companies. The distinct shift in business model began around the time when homegrown payments major Paytm launched its operations.

Pine Labs has developed a cloud-based payments platform, which allows merchants to accept traditional electronic payment methods such as credit or debit cards issued by any bank, e-wallets, QR code payment solutions or other UPI based solutions, on a single platform.

Through its cloud platform, Pine Labs has been able to offer retailers targeted customer-engagement campaigns; consumer analytics; and in-store consumer financing for partner brands that can be tailored to customers at the point of sale.

The latest products in Pine Labs’ portfolio include electronic gift cards, and a pay-by-points product that spans major card loyalty programs. Pine Labs has also partnered with non-banking finance companies to rapidly scale up the merchant lending business.

The company claims to be processing about 450 million transactions worth over $15 billion on an annual basis and says that it handles approximately 15% of India’s cashless transactions in physical retail stores, and is currently deployed at approximately 300,000 payment acceptance terminals.