Indian unicorn Pine Labs buys loss-making SE Asian discounts platform Fave in $45m deal

Fave

Loss-making Southeast Asian loyalty and cashback platform Fave said on Tuesday that it has been acquired by the Indian merchant commerce platform, and unicorn, Pine Labs in a deal valued at over $45 million.

DealStreetAsia had reported in November last year that Fave is in the market scouting for prospective buyers. Fave co-founder and CEO Joel Neoh had rejected the claims at the time, saying his firm remains focused on growing its fintech platform and helping merchants adopt cashless payments and loyalty solutions.

In July 2020, Temasek-backed Pine Labs had invested $4 million for a 12% stake in, what appears to be, a down round in Fave. According to company filings, Malaysia-based Fave’s valuation more than halved to $34.5 million after that deal. Fave was valued at $73.8 million in a Series B round in September 2018.

The $45 million that Fave is now being sold for, is much less than the funds it has raised so far. It was reported that, as of November last year, Fave had raised $46.9 million in venture capital from investors.

Tuesday’s acquisition will help both companies accelerate their growth in Asia and unlock massive consumer opportunities across retail, F&B, fashion, and fast-moving consumer goods (FMCG) markets, Fave said in a statement.

Indian consumers will be able to use the Fave app later this year to save across 500,000 merchant network points powered by Pine Labs across 3,700 cities in the country. “India has the digital advantage of a young demography, growing aspirational middle class with rising disposable income and increasing digital savviness,” Neoh said in the statement.

Fave said the introduction of the app this year comes at an opportune moment, with the unified payment interface (UPI) growing to 2.7 billion transactions in March 2021. Pine Labs also recorded a significant growth of 171% in UPI transactions over the last two quarters.

Fave’s founders will broaden their roles to lead the overall consumer platform for the group across Asia, the company said. Fave added it will hire over 100 new employees in Southeast Asia and India to accelerate cashless payments and smart savings across the region.

Distress sale

Fave’s FY 2019 financial report suggests that its net losses were ballooning. The Fave Group incurred a net loss of nearly $10 million for the financial year ended December 31, 2019, widening 30% year-on-year.

Its operating cash outflow also remained in the red at $7.5 million in FY2019, compared with $7.45 million in FY2018, after close to five years of operations.

In December 2019, DealStreetAsia reported that Fave was raising $50 million for its Series C round, which was “oversubscribed” by potential investors. The round did not take off.

Fave, formerly Kfit, was founded in 2015 by Neoh, who was the former CEO of Groupon’s Asia Pacific business. The firm acquired Groupon’s assets in Singapore and Malaysia in 2016 to eventually expand its product line into payments, cashbacks, and loyalty programmes.

In Southeast Asia, it competes with other rewards and cashback apps like ShopBack and Rebate Mango.

It counts 500 Startups, Axiata Digital Innovation Fund, and Segnel Ventures among its early investors. Its 2018 Series B round saw participation from Sequoia India, SIG Asia Investment, and Venturra Capital.

Pine Labs is one of Asia’s merchant commerce platforms, serving merchants across Asia and the Middle East. Incorporated in Singapore, Pine Labs’ key investors include Actis Capital, Mastercard, PayPal, and Sequoia India, besides Temasek. It raised funds from Lone Pine Capital in December last year, sending its valuation north of $2 billion.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.