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Sequoia Capital Planning Its Exit From Noida Based Pine Labs

Sequoia Capital Planning Its Exit From Noida Based Pine Labs

American venture capital firm Sequoia Capital is exploring the options to sell out its portfolio company Pine Labs, one of the country’s largest PoS (point of sale) solutions provider.

According to the sources reported to ET, Sequoia Capital, who presently owns two-third of this Noida based startup, is targeting a valuation of about $1 billion for it to completely exit the company.

In case, such valuation demands are not met, the Menlo Park-based Powerhouse is also considering a partial stake sale in the company in which it had initially invested $1 million in 2009.

Avendus Capital has been given the mandate to raise $100 million for a minority stake.

“The formal mandate that is ongoing is for a stake sale. Currently , the company is being valued at $600-700 million by peers but if a strategic investor sees long-term potential, and agrees on the premium that matches the Sequoia ask, the entire company will be up for grabs.Sequoia is extremely bullish on the company and is not desperate to cash out. Both options are therefore on the table,” a source privy to the development said.

A Sequoia Capital spokesperson denied that the firm was in talks to exit its position -partially or completely – from the company.


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“Sequoia has no desire to sell any of its stake at this time. This is consistent with Sequoia’s global approach of staying invested in market leaders for the long term,“ Shailendra Singh, MD at Sequoia Capital, said in an email response to ET.

While Avendus Capital declined comment, Pine Labs CEO Lokvir Kapoor said the company plans to raise $100 million for expansion of operations to global markets.

Pine Labs, which was founded in 1998, works with more than 70,000 retailers across the country , including major retail outlets such as Marks and Spencer, Pantaloons, Shoppers Stop and Westside.

Pine Labs will need fresh funding as it looks to spread its presence outside its home market, and for potential acquisitions.

The company, which, till date, has raised about $50 million in primary capital, has recorded transaction volumes of about $15 billion with about 250,000 merchant touch points, according to Kapoor.

“(We plan to) double our footprint in the current year, grow affordability programmes by about 100%, launch new services, as well as a customer analytics platform for merchants. We are also looking at expansion into international markets starting with Malaysia and UAE this year, and expanding to 10 countries next year,” Kapoor said.

The company competes with Axis Bank, HDFC Bank and SBI, which deploy their own terminals directly at merchant outlets.


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According to data shared by the Reserve Bank of India, debit card transactions at PoS terminals has more than doubled to 2.4 billion transactions in 2016-17, from around 1.1 billion last year. Even the number of terminals has reached around 2.7 million, against 1.5 million before demonetisation.

In April, the venture capital firm had scored about $180 million in a series of secondary transactions, including one in Pine Labs, after it sold a portion of its stock in the company to Madison Capital.

 

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