Pine Labs makes progress on return to India
Nearly six months have passed since the publication of media reports speculating on a forthcoming IPO by Indian B2B payments fintech Pine Labs at a valuation of US$6 billion. One reason for what seems to be relatively slow progress on the company’s plans to go public is that it first needs to complete a change in its domicile from Singapore to India. Increasingly, Indian startups are shifting their domiciles from other nations to India because it is highly unlikely for companies with valuations below US$20 billion to get meaningful coverage from analysts in developed markets, which may dampen institutional investor demand. PhonePe and Groww have already shifted their domiciles to India, while Meesho, Razorpay, Zepto and Udaan have begun the process.
Indian media reported last week that Pine Labs could have a hefty tax bill to pay due to shifting its domicile. It is unclear how much the company will have to pay, but its competitor Razorpay – another prominent Indian B2B payments fintech – may have to pay US$300 million in taxes in the U.S. for its own relocation to India.
Pine Labs has been planning to go public since at least 2022, when it reportedly filed confidentially for an IPO with the U.S. Securities and Exchange Commission, but that plan never came to fruition given weak market sentiment. According to a June 21 Bloomberg report, Pine Labs may try to raise about US$1 billion at a valuation of more than US$6 billion. The company could issue both new and secondary shares, as well as do a pre-IPO fundraising round ahead of any listing.
That said, there are several reasons to be optimistic about a Pine Labs IPO. The company says that it serves over 500,000 merchants – including Sony, BMW and Samsung – to which it provides solutions for payments and other financial services. With its focus on B2B payments, it eschews many of the problems that have dogged Paytm.
Additionally, there is growing investor appetite for Indian stocks. In Nov. 2023, the market value of companies listed on India’s exchanges surpassed US$4 trillion, according to Refinitiv. That means it ranks No. 4 in value globally behind the U.S., China and Japan. Long-term investors have an increasing interest in Indian equities, which is a shift from the past when Indian stocks attracted more short-term investors.
Further, Pine Labs has managed to grow in private markets during a time of greater investor scrutiny than many of the unicorns that went public when interest rates were low and VC funding flowed freely. Both Invesco and Baron Funds have recently raised Pine Labs’ valuation, the former to US$4.8 billion in Dec. 2023 and the latter to US$5.8 billion in April.
