Ghar Waapsi: Pine Labs gets Singapore court approval to shift its base to India

Merchant commerce and payments platform Pine Labs has received approval from the Singapore Court to relocate its base to India.

Recently, the court approved the fintech firm's request to merge its Singapore entity, Pine Labs Limited (PLS), with its Indian counterpart, Pine Labs Private Limited (PLI), and to transfer all assets and properties.

What does the amalgamation entail?

The merger will involve the complete transfer and vesting of PLS's assets and liabilities into PLI.

This means all shareholders of PLS will become shareholders of PLI, and any pending legal proceedings against PLS will be carried on by PLI.

According to PLS’s regulatory filing in Singapore, the transfer is expected to achieve business synergies and economies of scale, cost savings, and operational efficiencies through rationalisation and standardisation of business processes.

Once the National Company Law Tribunal (NCLT) in India approves and files the order with the Registrar of Companies, PLS will be dissolved without winding up.

Why are fintech companies moving back to India?

Pine Labs is among several fintech firms shifting their bases back to India, following in the footsteps of companies like PhonePe and Groww.

The trend is driven by favourable economic policies, an expanding domestic market, and regulatory ease for local startups.

The Indian government encourages this process, known as 'reverse flip', to have companies set up their bases in the International Financial Services Centre (IFSC) in GIFT City to tap into global market opportunities.

What are the financial implications of the relocation?

The financial implications of such relocations are significant. In April, US-based investment firms Baron Funds and Invesco valued Pine Labs at $5.8 billion and $4.8 billion, respectively.

It's worth noting that valuation plays a crucial role in determining tax liabilities during domicile shifts. For instance, PhonePe’s investors paid Rs 8,000 crore in taxes for its relocation process. 

Cost savings and simplified shareholding structures

Pine Labs aims to benefit from cost savings, streamlined operations, and simplified shareholding structures through this move.

The company reduced its losses by 12.36% to Rs 227 crore in FY23, with total revenue of Rs 1,588 crore. It is backed by notable investors like Peak XV Partners, Fidelity, Invesco, Temasek, PayPal, and Alpha Wave.