India's Pine Labs buys VC-backed Setu
Indian financial technology company Pine Labs, which has raised more than USD 1.5bn in private funding, has acquired VC-backed counterpart Setu.
The transaction is reportedly worth USD 70m-USD 75m. It is Pine Lab’s third acquisition this year, following payments and billing start-up Qfix Infocomm in February and mobile point-of-sale payments player Mosambee in April. The Mosambee acquisition valued it at USD 100m.
Setu, which specialises in application programming interfaces (APIs), received a USD 15m round as recently as April 2020. Investors included Falcon Edge Capital (now Alpha Wave Global), Lightspeed India Partners, and the government-backed incubator Centre for Innovation Incubation & Entrepreneurship.
The company works with non-banking financial companies across India to accumulate and consolidate individuals’ financial data and create APIs for use-cases such as personal finance management, monitoring loans to predict default rates, and credit underwriting. Information is said to be amassed via a consent-driven data-sharing framework.
Setu’s client base spans start-ups, retail enterprises, banks, insurance companies, and lending companies. Its technology is compatible with WhatsApp-enabled financial services, as well as government architecture such as document signing system Aadhaar eSign, bill payments system BBPS, and electronic toll road collection system FASTag.
“Embedded financial services and open banking are going to be the way forward and the embedded finance market value is expected to exceed US $138 bn by 2026 as APIs are intensifying the competitive fintech landscape,” Pine Labs CEO B Amrish Rau said in a statement.
“Setu helps their customers, merchants, and brands build beautiful experiences, so consumers can engage with payments and financial services on their terms.”
Pine Labs offers a cloud-based platform that allows merchants dependent on traditional point-of-sale terminals to accept payments via online wallets, QR codes, and electronic gift cards, as well as credit and debit cards. The company has been EBITDA positive for several years.
Pine Labs raised USD 100m from Invesco last September, two months after closing a USD 600m pre-IPO round that featured BlackRock, Fidelity Management, IIFL Asset Management, Temasek Holdings, and Ward Ferry Management, among others. It is said to be targeting a USD 500m IPO in the US at a valuation of USD 7bn.
Alpha Wave provided Pine Labs with USD 150m last February, while Vitruvian Partners invested USD 50m in March, according to AVCJ Research. The earliest backers include Sequoia Capital India and Madison India Capital, both of which have retained exposure.
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