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Mastercard (MA)-Backed Pine Labs Pursuing IPO in New York

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Mastercard Incorporated (MA - Free Report) and Sequoia India-backed digital payments provider, Pine Labs is looking to execute an initial public offering in the New York stock exchange in first-half 2022, per Bloomberg.

Through the listing, Pine Labs — an Indian merchant platform company — is expected to raise $500 million, which would give it a valuation of $5.5-$7 billion. It has filed for the IPO with the Securities and Exchange Commission, per Bloomberg. Mastercard made a significant investment in Pine Labs in early-2020 to capitalize on the growing economy of India. In addition to Mastercard, Pine Labs has PayPal Holdings, Inc. (PYPL - Free Report) , Actis Capital, Temasek and Sofina as investors in the leading merchant commerce platform.

Pine Labs, which is rapidly expanding its presence in Southeast Asia, raised $600 million last year from multiple investors. Last week, major Indian bank State Bank of India invested $20 million in Pine Labs, which is working to expand the Buy Now Pay Later business in Southeast Asia. Mastercard and Pine Labs joined forces to boost the pay later business in Southeast Asia. Foreseeing the growing digitization in the region, PayPal and Temasek acquired minority stakes in Pine Labs in May 2018 for a total of $125 million.

Mastercard aims to bring 1 billion people under the ambit of the digital economy by 2025. As such, Pine Labs’ growth will likely help MA reach its target. The COVID-19 crisis accelerated the use of electronic forms of payment, with much greater adoption of digital and contactless solutions. The digital form of payments is expected to sustain beyond the pandemic. Mastercard is expected to capitalize on this trend.

The rising demand for digital payment solutions is being addressed by many other players in the market as well. Other companies like Visa Inc. (V - Free Report) and The Western Union Company (WU - Free Report) are also ramping up efforts to capitalize on the growing market.

Visa is making the best use of mergers and acquisitions, partnerships, and minority investments to achieve inorganic growth. This strategy is helping the company maintain its leading position in the payment network space. Visa enjoys strong cash and available-for-sale investment position along with solid free cash flow, which supports the acquisitions. Also, Visa continues to invest in technologies to further minimize the impact of fraud and protect consumer and merchant information. This makes V a safe choice for clients.

Headquartered in Denver, CO, Western Union enjoys a robust digital arm, thanks to several digital partnerships and investments. The company is building a solid digital services portfolio and digitizing the money movement process for clients. WU is also boosting the efficiency of operations and remains on track to achieve annual cost savings of $150 million by 2022. Western Union expects constant-currency revenue growth of 3-4% for 2021, indicating a turnaround from a 3% decline in 2020.

Price Performance & Zacks Rank

Shares of Mastercard have lost 1.6% over the past six months compared with the industry’s 14.1% decline.

Zacks Investment ResearchImage Source: Zacks Investment Research

The company currently has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.