Fintech platform Pine Labs has received the approval of the Singapore court to shift its domicile to India, merging its Indian and Singapore entities, Pine Labs Limited (PLS) and Pine Labs Private Limited (PLI). This was first reported by TechCrunch.
The National Company Law Tribunal (NCLT) is yet to consider its application process to shift its base to India. Following the NCLT approval, the Singapore entity of Pine Labs will dissolve.
According to a regulatory filing made in Singapore, PLI would receive full ownership and transfer of Pine Labs Limited's undertaking, including all its assets and liabilities, in accordance with the amalgamation agreement. Following the deal, Pine Labs Private Limited (PLI) will become the sole stakeholder of the Singapore firm, and PLI will pursue any ongoing legal action against PLS.
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Pine Labs functions as a merchant commerce platform, providing point-of-sale (POS) services that allow merchants to accept both plastic card and QR-based payments in their stores. The company offers a range of products and services, including buy now, pay later (BNPL) options, invoice management, gifting solutions, and e-commerce enablement. Valued at over $5 billion, the company is backed by investors such as Peak XV, Fidelity, Invesco, Temasek, PayPal, and Alpha Wave.
Pine Labs isn’t the first company to shift its domicile back to India. Several start-ups are planning to move or have moved back to India, it's a phenomenon known as 'reverse flip’.
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Why did Pine Labs decide to move its domicile to India?
While the company hasn’t officially said anything about the move, as per a regulatory filing, this merger is anticipated to result in greater cost savings, more focused operational efforts, and standardisation of business processes through the consolidation of the group.
The fintech start-up also explained, as per TechCrunch, that this shift to India will help simplify the shareholding structure and achieve more economies of scale. While it is not sure if the start-up aims to file for an IPO in India, the company did file for a confidential US IPO in 2022 to raise $500 million. However, citing weak market sentiments, the company halted its IPO plans.
What are the other start-ups that moved to India?
Pine Labs is the third fintech start-up to shift its base back to India, the other two being Groww and PhonePe. Fintech unicorn Groww moved its domicile back to India from the USA this year. Groww merged its Indian parent business, Billionbrains Garage Ventures, with its US-based holding company, Groww Inc., as part of the transition. In April last year, the National Company Law Tribunal (NCLT) granted the start-up permission to merge.
In 2022, mobile payment app PhonePe relocated to India from Singapore. Investors in PhonePe had to pay Rs 8,000 crore in taxes to shift their domicile back to India.
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Zepto, Meesho, Razorpay, and Udaan are some of the other companies that are in talks to move their domicile back to India. E-commerce platform Flipkart is also in talks to move its domicile from Singapore to India, as per a report by the Economic Times.
India is the third-largest start-up ecosystem in the world. The country today has more than 1.25 lakh start-ups and 110 unicorns. A strong, robust market ecosystem and a higher valuation are some of the reasons for the start-ups to move back to India.
Start-Ups valued under $20 billion are unlikely to receive significant analyst coverage in developed markets, resulting in limited interest from institutional investors, as per TechCrunch.
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Similarly, the IPO market in India has been rising. India has emerged as one of Asia's most active IPO markets this year, as per a report by Bloomberg. Larger share sales are starting to appear, which is changing the norm and making India more appealing to foreign investors reallocating money.
Flipkart's decision to move its domicile back to India might be linked to its goal of an IPO. While the company does not intend to go public in 2024, recent IPOs of consumer companies in India have demonstrated strong investor interest in large consumer businesses on domestic stock exchanges, according to a report by the Economic Times. As a result, there is consideration to relocate the holding company to India to potentially capitalize on this favorable market sentiment. It remains to be seen how many more start-ups will join the trend of reverse flipping in the upcoming months.
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