India: Payments firm Pine Labs raises $82m from Actis Capital, Altimeter, others

Digital payments platform Pine Labs has raised $82 million in an investment round led by Actis Capital, along with Altimeter Capital, said Lokvir Kapoor, chief executive officer of the fintech startup.

The latest funding values Pine Labs at close to $1 billion, two people aware of the development said, requesting anonymity. Kapoor declined to comment on the company’s valuation.

Sequoia Capital-backed Pine Labs offers a cloud-based point-of-sale (PoS) payments solutions, allowing merchants to accept credit or debit card payments, as well as latest methods such as e-wallets, QR code payment solutions and unified payments interface (UPI)-based solutions.

Pine Labs currently processes 450 million transactions worth over $15 billion on an annualized basis, Kapoor said.

“We have a presence of about 300,000 PoS in the market, which is about 10% of the footprint in the country. We have about 15% of the card volume flowing through our network,” said Kapoor.

Pine Labs has been growing strongly in the Indian market over the past two-to-three years and is now planning to expand overseas. The company entered Malaysia in the December quarter.

“We are growing in the domestic market at 60-70%, year-over-year. We have gone live in Malaysia, which is our first international market,” said Kapoor.

The United Arab Emirates (UAE) is likely to be the next market where Pine Labs might start operations, followed by Saudi Arabia and Indonesia, he said.

The company is also exploring entry into other South-East Asian countries such as the Philippines, Indonesia, Thailand and Vietnam, as well as Qatar in West Asia.

“The plan is to continue to grow in the domestic market at the rate that we have been growing at. In the next three-to-four years we expect to grow from the current level of 300,000 to 1 million terminals, and we plan to go live in four or five markets over the next three-four years. In the next two-three years, we are looking at a revenue of around 25% from international markets,” he said.

A part of the funds raised from Actis and Altimeter will be used to expand into international markets.

“When we enter a new market, we have to set up the infrastructure for the processing of payments, which includes networks, data centres, security set-up, support services. All of that requires a few million dollars,” said Kapoor.

Funds will also be used to develop new services for merchants, over and above the basic payments processing services.

Pine Labs provides services such as targeted customer-engagement campaigns, consumer analytics and in-store consumer financing.

The firm has also introduced products such as electronic gift cards and a pay-by-points product that spans major card loyalty programmes and it has also partnered with non-banking finance companies for merchant lending.

“These services contribute to 30% of Pine Labs’ revenue,” said Kapoor.

Actis is an active investor in emerging markets, with a portfolio of investments across Asia, Africa and Latin America, and has raised more than $13 billion since inception.

“Actis has invested in payments businesses across the growth markets operating in more than 50 countries, from Brazil to Malaysia, helping to build the financial infrastructure of the future. We are keenly looking forward to working closely with the team at Pine Labs over the coming years,” said Asanka Rodrigo, partner and head of South Asia at Actis.

Pine Labs’ existing venture capital investor Sequoia Capital first invested in the payments company in 2009. Sequoia is the largest shareholder in the company.

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