No window for IPO in current market situation: Pine Labs CEO Amrish Rau

“But there is no window for an IPO (right now) and there are no qualms to say that at this point,” Rau said.

“As far as we are concerned, financially Pine Labs is in a sound position and has already raised more than $1.1 billion. And we are in no hurry right now to go for an IPO,” Rau said.

The company ended FY23 with net revenues of Rs 1600 crore and positive EBITDA (earnings before interest, taxes, depreciation, and amortisation), Rau said.

This is the first time the Sequoia Capital and Mastercard-backed payments unicorn has commented on its IPO plans. It had filed for a confidential IPO worth $500 million with the US Securities and Exchange Commission in January 2022, and has been deferring its listing plans, as global macros worsen.

“Our investors are clear that a company like Pine Labs should not go out (to list) in a storm. We should go out when there is a fair wind and fair sale, and everyone wants the weather to clear up before we go for an IPO,” said Rau, who took over as the CEO of the fintech group in 2020.

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Pine Labs was last valued at $5 billion after it raised $50 million from private equity major Vitruvian Partners in May 2022.

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Indian fintechs like Paytm and PayU have recently come under tremendous regulatory scrutiny. PhonePe recently shifted its corporate entity back to India. For the Singapore domiciled Pine Labs, this decision is not made yet, but will depend on where they get a significant chunk of their revenues from.

“The decision (of shifting domicile) should not be based on valuations or taxation. It should be based on whether the technology built is for global or domestic markets. And that is the discovery that is undergoing with Pine Labs currently. Based on those outcomes we will decide on the best domicile for the company,” said Rau about the move.

Rau further added that its decision to also list on the domestic or global bourses will strongly “depend on where its majority revenue pools lie.”

At present, almost 15% of the firm’s revenues come from global markets that continue to be large profit pools.

International expansion and pushing growth

As most fintechs hunker down in the current macro environment, Pine Labs has been pushing the pedal on growth, making five of its six acquisitions between 2021 to 2022.

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Now it is planning to take its gift card issuing service, an important revenue item for the company, its payments installment stack, and services around QR code payments immediately to the US and European geographies.

“This year, we will have a sales outpost in the US, and in Europe wherein we will have people actually pushing our technology in those markets,” said Rau.

The company is currently present in five Southeast Asian countries and recently launched in the UAE.

Further, the company may continue to look at acquisitions to grow or enter newer geographies.

“We don’t have anything lined up immediately. We are looking at increasing our product portfolio and may look at merchant loyalty, customer relationship management as one of the areas. We may look at some global acquisitions as well to enter new markets,” said Rau.

Unlike many of his peers who are chasing a lending licence to foray into credit, Rau said Pine Labs has no such plans at present.

On whether Pine Labs will procure an NBFC licence, Rau said, “This was an activity when I came in. But since I’ve come in, there have been no attempts to work towards building an NBFC. We might get there, but not immediately.”

Revenue and profitability

With its acquisition spree, the company has also seen a delay in turning PAT positive. However, Rau said the company is looking to turn PAT positive by the end of the ongoing fiscal (FY24).

“Had it not been for those acquisitions, we would have been PAT positive by now. We are at a 20% EBITDA profitability and want to maintain that going forward,” said Rau.

He added that in FY23, the company’s revenues grew over 50% year-on-year, with acquisitions contributing 7-8% of that growth.

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Pine Labs’ strategy to diversify its revenue lines has been working with less than 50% of its revenues now coming from the PoS business. Gift card issuances, installment payment services and payment gateway business are other strong revenue lines.

However, just like all other fintechs, Pine Labs may not be able to sustain the revenue growth in FY24 considering macros.

“For us FY24 will be difficult since the growth rates will not be anywhere close to the growth rates we have seen in FY23. We will sacrifice the low margin revenues to go after high margin revenues, so while revenue growth may drop, the EBITDA growth could look higher,” added Rau about the company’s revenue strategy.

He added that net growth in revenues will be down by at least 10% in FY24 compared to the previous fiscal.