Pine Labs, a prominent player in the realm of digital payments, has now aligned itself with the emerging trend among technology enterprises to defer their initial public offerings (IPOs). In an exclusive interview with ET, Amrish Rau, the CEO of Pine Labs, firmly expressed his decision to withhold the planned IPO, citing the tumultuous state of global markets. With sagacious foresight, Rau asserts that the present juncture does not provide a conducive window for an IPO endeavor, a statement imbued with unwavering conviction.
Unwavering in its financial fortitude, Pine Labs stands in a position of fiscal robustness, having already garnered a substantial influx of more than $1.1 billion. Rau confidently reaffirms the company’s steadfast stance to refrain from hastily pursuing an IPO, remarking that there is no urgency to embark on such a venture. The fiscal year 2023 concluded on a prosperous note for the company, boasting net revenues amounting to Rs 1600 crore and a commendable positive EBITDA. Such fiscal accomplishments reflect the company’s sound financial foundation, which Rau eloquently expounds upon.
The annals of Pine Labs’ history are embellished with its association with Sequoia Capital and Mastercard, which have significantly bolstered its position in the payments domain. It is noteworthy that the unicorn, backed by these stalwart entities, has now shed light on its IPO strategies. The veil of secrecy shrouding its intentions was lifted when it submitted a confidential IPO filing worth $500 million to the US Securities and Exchange Commission in January 2022. Akin to a wise mariner, Pine Labs has steered its course with deliberation, postponing its listing plans as the global economic landscape took a somber turn.
The visionary ethos governing Pine Labs’ course of action has been unequivocally articulated by Rau. Cognizant of the tempestuous nature of the financial realm, he opines that Pine Labs, akin to a ship of substantial worth, should not set sail in stormy waters. The prevailing sentiment is to await a propitious breeze and a favorable climate for the IPO. Rau’s leadership, culminating in his ascension to the CEO role in 2020, has steered the fintech group with prudence and circumspection.
Amid the contemporary landscape where regulatory scrutiny has enveloped Indian fintech giants like Paytm and PayU, Pine Labs’ strategic decisions have been sagaciously calibrated. While the decision to shift its corporate domicile remains pending for the Singapore-domiciled Pine Labs, the determinants are poised to be rooted in pragmatic considerations. Rau astutely differentiates between the calculus of valuation and taxation and the overarching vision of global versus domestic market orientation. Such discerning insights are emblematic of Pine Labs’ judicious approach, poised to discern the optimal course of action for the company.
The company’s choice of listing, whether on domestic or global bourses, is intrinsically linked to the epicenter of its revenue streams. A careful examination reveals that nearly 15% of Pine Labs’ revenues emanate from the expansive domains of global markets, continuing to serve as lucrative profit pools. The subtle interplay between revenue dynamics and market orientation is deftly explicated by Rau, further emphasizing Pine Labs’ strategic acumen.
In the prevailing macroeconomic context, where many fintech entities have adopted a defensive posture, Pine Labs emerges as a beacon of assertive growth. With strategic acquisitions spanning the years 2021 to 2022, the company has demonstrated an unwavering commitment to expansion. Bolstering its endeavors, Pine Labs intends to introduce its gift card issuance service, a pivotal revenue source, alongside its payment installment stack and QR code payment services, to the geographies of the United States and Europe. Rau, with his characteristic clarity, elucidates the imminent establishment of sales outposts in these regions, envisaging a dedicated push for the company’s technology.
Pine Labs’ global aspirations are underscored by its recent foray into the United Arab Emirates, building upon its presence in five Southeast Asian countries. Rau’s narrative hints at a future marked by calculated growth strategies and judicious market entries, a testament to Pine Labs’ evolutionary trajectory. The company’s proactive stance in considering additional acquisitions for expansion resonates as a testament to its pursuit of new horizons.
In a landscape where peers are pursuing lending licenses foray into the credit domain, Rau remains steadfast in Pine Labs’ distinctive course. With an eloquent negation, he dismisses any immediate inclination toward procuring an NBFC license, underscoring the company’s focused agenda. The strategic direction steered by Rau speaks volumes about Pine Labs’ clarity of purpose and its unwavering commitment to its chosen trajectory.
While Pine Labs’ acquisition-driven strategy has momentarily deferred its path to positive PAT, Rau unveils the strategic intent to rectify this course by the culmination of the ongoing fiscal year. His candid assertion underscores that Pine Labs’ EBITDA profitability, currently standing at an impressive 20%, is a harbinger of the company’s resolve. The interplay of acquisitions and organic growth manifests in Pine Labs’ upward revenue trajectory, with Rau attributing a substantial 7-8% of growth to acquisitions in the fiscal year 2023.
As Pine Labs endeavors to diversify its revenue streams, it tactfully steps beyond the confines of the PoS business. The company’s revenue matrix is enlivened by robust lines of revenue from gift card issuances, installment payment services, and payment gateway operations. Rau, with sagacious foresight, forecasts the impending fiscal year to be marked by nuanced strategies, optimizing EBITDA growth while navigating the challenges that macroeconomic conditions present.
Pine Labs’ narrative, though adorned with achievements and astute strategies, anticipates a phase of tempered growth in the fiscal year 2024. Rau’s forthright admission reflects the company’s maturity in understanding the cyclical nature of markets. Sacrificing low-margin revenues in favor of high-margin pursuits, Pine Labs is poised to steer its course with prudent financial stewardship.
In culmination, Rau’s narrative weaves a tale of strategic prowess, grounded in a sagacious understanding of the financial realm. Pine Labs emerges not only as a fintech entity but as a deliberate navigator, charting its course amidst global market ebbs and flows. Amrish Rau, at the helm of Pine Labs, personifies a steward steering the company with acumen and resolve, embodying the spirit of prudent growth and strategic finesse.