Fintech company Pine Labs, which processes payments of $30 billion a year, is preparing for an IPO but it has not yet decided when or where it will list, its chief executive Amrish Rau said.
"I am not a believer in talking about IPOs beforehand but I certainly want to understand what it takes, how the market operates, and getting your business practices in place to be ready. But we are not in a position to say when the IPO will happen," Rau told Moneycontrol in an interview.
In 2020, the company has consulted law firms, audit companies and bankers for the IPO. "In terms of the evaluation process of which banker, we are not there yet but things could change in the next 2 months," he said.
The Times of India recently reported that Pine Labs, which offers digital payment and commerce solutions to merchants, aims to list in the US by March 2022 with a valuation of $5 Billion. Pine Labs, founded in 1998 as a smart-card payment and loyalty solutions company, was last valued at over $2 Billion in December 2020, when it raised a fresh round of funding from Lone Pine Capital.
Mastercard invested in January 2020, after which Pine Labs became a unicorn (a privately funded firm valued at a billion dollars and above).
Pine Labs serves more than 150,000 merchants in 3,700 cities across Asia and the Middle East, as small businesses and consumers increasingly adopt digital commerce and contactless checkout. It has also enabled its ‘buy now, pay later’ credit service to 150,000 outlets.
"Rs 70 crore worth of goods are being bought every day on instalment. We have made very good progress in South East Asia and have partnered with banks in Malaysia, Indonesia, and Singapore. We will step up presence in these markets and Thailand by the end of the year," Rau said.
Interestingly, Pine Labs is also part of one of the consortiums that have applied for an NUE or New Umbrella Entity license. The Economic Times reported recently that Amazon, Axis Bank, ICICI Bank, and Visa are planning to set up an NUE along with BillDesk and Pine Labs to create a new national payments network, that would compete with the NPCI.
When asked about the application and the larger vision of the NUE, Rau said, "I am not making a comment on what our NUE wants to do but as a market participant who has seen things evolve. The NUEs, for which RBI has invited applications is a payment and settlement body, which will be deeply regulated."
"It is incorrect to see NUE as a new bank license or a consumer internet platform. It will not be allowed to run as a private entity but as a public convenience entity with broad-based shareholding. So, to think that one entity will come and dominate the payments space is shallow thinking," he said.
The past year has given a huge fillip to digital payments in India, with NPCI's UPI platform clocking over 2-2.5 billion transactions a month, crossing the Rs 5 lakh crore mark in value last month. While UPI is still dominated by P2P (peer to peer) transactions, growth in P2M (peer to merchant) has been rising month on month. For March 21, the total volume of P2M transactions rose to over 1.2 billion from billion in the previous month.
When asked if the growth of UPI P2M has come at the cost of debit cards and credit cards, Rau said, "The growth in UPI and QR and the decline in the number of card transactions are not co-related because they serve different segments. While UPI QR is replacing cash, cards were used a lot more at restaurants, hotels, movie theatres, and malls, which were shut because of the pandemic."
"But, I think tap-based transactions using the card will become much more convenient than using QR at the time of checkout. 100 percent of our terminals now accept contactless payments and 50-60 percent of cards in the market today enable contactless payments," he said.
Pine Labs is one the largest POS (point of sale) players, processing US$30 bn of payments annually, representing 14 percent of card spends through a network of ~600k POS machines, according to a recent report from Credit Suisse.
Its business model consists of fixed rental for POS machines, with bundled services such as analytics, billing, reconciliation, EMI financing, and loyalty programs. It has also become a player in offline POS consumer durable financing where it has tied up with banks to offer no-interest EMIs to credit card and debit card customers.
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