Pine Labs to acquire API infra startup Setu for over $70 mn – VCCircle

Written by Amanda

IPO-bound fintech unicorn Pine Labs today announced that it is acquiring Bengaluru-based Setu, an API (application programming interface) infrastructure fintech startup for around $70-75 million (around Rs 550-580 crore) .

This is the third acquisition announced by Pine Labs this year, the Noida-based merchant commerce platform said in a statement.

In February, Mint had exclusively reported that the Noida-based merchant commerce platform was in advanced negotiations to buy Setu.

As part of the acquisition, Pine Labs will also acqui-hire around 90-100 employees of Setu.

Setu, founded by Sahil Kini and Nikhil Kumar in 2018, started with offering open APIs across four categories—bills, savings, credit, and payments. APIs are the bridge used by software applications to interact with each other. Setu is Hindi for bridge and the company offered a suite of APIs and software solutions that could be deployed by fintech firms.

“Setu will make an incredible addition to the Pine Labs platform for a few reasons. Embedded financial services and open banking are going to be the way forward and the embedded finance market value is expected to exceed $138 billion by 2026 as APIs are intensifying the competitive fintech landscape,” said B Amrish Rau, CEO, Pine Labs.

He added, “Setu helps their customers, merchants, and brands build beautiful experiences, so consumers can engage with payments and financial services on their terms. We are in the golden phase of digitisation in India, and Setu is a pioneer in supporting innovation on the India stack – their work on UPI and in the account aggregator space is moving the industry forward.”

Setu’s APIs are being used across industry verticals including startups, retail enterprises, banks, insurance, and lending companies. Its existing and emerging use cases cut across multiple digital ecosystems, from Aadhaar eSign to BBPS bill payment, payment collection integration via WhatsApp, FASTag payment collection and more.       

“I have seen both Sahil and Nikhil at close quarters earlier, at Aadhaar and UPI. The kind of infra Setu is building will be very important for India in the years to come and I am happy that they are relentlessly moving towards that goal and this partnership with Pine Labs will help them to accelerate,” said Nandan Nilekani, Co-founder and Chairman of Infosys Technologies Limited.

Sequoia-led, IPO-bound Pine Labs, which is expected to list on the US exchanges soon, has been looking to diversify and enter adjacent growth areas. The point-of-sale (PoS) major is investing to scale Plural, its newly launched brand for online payments products.

Earlier VCCircle reported that Pine Labs may defer the IPO process till later this year due to “weak market sentiments”. It was planning to launch its Nasdaq listing process in January-February and had hired Goldman Sachs and Morgan Stanley to formalize the process.  

Pine Labs has been active in M&A (mergers and acquisitions), and it has struck a few acquisitions in the recent past. In February it acquired out payments startup Qfix Infocomm, for an undisclosed amount.  

In April, it had picked up a majority stake in payment solutions provider Mosambee.

Pine Labs’ solutions are used by merchants from diverse sectors—electronics, food and beverage, fashion, pharmacy, telecom and airlines, but these are mostly offline players. The company is also planning to ramp up its online platform, both by organic and inorganic means.

In 2021, Pine Labs raised a total of $600 million from US-based asset management firm Fidelity, Blackrock and others, followed by a $100 million fundraise from US-based Invesco Developing Markets Fund.  

Rajul Garg launched Pine Labs in 1998 but left the firm in 2003. Lokvir Kapoor, the company’s current chairman, then took over the payments company.

Source: vccircle.com

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Hi there, I am Amanda and I work as an editor at impactinvesting.ai;  if you are interested in my services, please reach me at amanda.impactinvesting.ai