Mumbai: Kenro Capital, which specializies in purchasing stakes from existing investors, is evaluating a $30-40 million investment in Pine Labs as the fintech giant’s early backers look to exit in part or in full ahead of its listing later this year, two people familiar with the matter.
“The investment firm has been speaking to some of Pine Labs’ early backers to pick up a stake as the partners understand the company very well,” one of the two people cited above said, requesting anonymity. The company fits well within their thesis of investing in those that have a clear visibility for an IPO, the person said.
Pine Labs was last valued at $5.05 billion when it raised about $50 million from Vitruvian Partners in 2022. It competes with Paytm and Walmart's PhonePe.
According to the second person, who also spoke on the condition of anonymity, the deal may likely have a slight discount in valuation, as it usually happens in a secondary transaction.
Shareholders in a secondary transaction sell their stakes to other investors, and no new capital is injected into the company.
Pine Labs declined to comment, while Kenro did not immediately respond to Mint’s request for a comment.
The fintech filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (Sebi) last month for its initial public offering. The filings showed that the company is set to issue a combination of fresh equity worth ₹2,600 crore and an offer-for-sale (OFS) of more than 14.78 crore shares.
Under the OFS, several prominent investors including Peak XV (largest institutional shareholder), Actis Pine Labs, Macritchie Investments, PayPal, Mastercard, Invesco, Madison India, among others, are expected to sell some stake. Even co-founder Lokvir Kapoor is selling shares in the OFS.
The proceeds from the fresh shares are aimed at funding the repayment or prepayment of the company's borrowings up to ₹870 crore, and Pine Labs is also planning to invest ₹60 crore in its overseas subsidiaries and ₹760 crore in IT assets like cloud infrastructure and other technological initiatives.
Founded in 1998 by Kapoor, Rajul Garg, and Tarun Upadhyay, Pine Labs offers merchants payment solutions, including point-of-sale machines for card payments. In 2020, the company appointed Amrish Rau as its chief executive officer.
Kenro Capital, led by former Peak XV partners Piyush Gupta and Norbert Fernandes, has outlined plans to target minority stakes in financial services and consumer sectors, focusing on tech-led companies. The venture capital firm was launched in November.
In his previous stint, Gupta was overseeing several companies, including Pine Labs, Healthkart, CarDekho and Zomato. He is joined by Fernandes, a private equity professional who has worked with Temasek, IvyCap Ventures and TR Capital. Fernandes has dealt with late-stage companies such as Lenskart, SMT,Sapphire Foods and Bigbasket in his past stints.
Kenro Capital invested $40 million ( ₹340 crore) in Bengaluru-based K12 Techno Services, Mint reported in December.
Pine Labs earned a net profit of ₹26.24 crore in the nine months ended December, according to its DRHP. The company incurred a net loss of ₹151.63 crore in the corresponding period of the previous year.
Revenue from its operations rose to ₹1,273.88 crore during the period, up from ₹1,006.56 crore a year earlier.