Pine Labs acquires API infrastructure startup Setu

Merchant commerce platform Pine Labs has acquired fintech infrastructure company Setu. According to Entrackr‘s sources, the deal is worth about $70 million.

“Setu will retain its team and brand and continue to operate independently,” company co-founder Sahil Kini said in a virtual press conference on Thursday.

This is the third acquisition for Pine Labs in 2022. The Singapore registered company took a majority stake in payment solution provider Mosambee in April and Mumbai-based online payments startup Qfix in February.

Fintech infrastructure company Setu has expanded its offering and now covers payments, data, investments and loans through its automated programming interfaces (APIs). In August 2021, the company partnered with Google Pay to offer fixed deposits through Equitas Small Finance Bank.

The company also runs the open-source initiative D91 Labs to conduct research and help fintech companies comply with regulatory requirements.

Setu had raised approximately $18.5 million, including a $15 million Series A round led by Falcon Edge and Lightspeed in April 2020. The company was valued at approximately $50 million during the round. Entrackr had exclusively reported development.

Setu competes with companies such as M2P Fintech, Signzy and Decentro in API infrastructure.

While Setu has yet to file its FY22 financial statements, the company has reported operating income of Rs 3.31 crore in FY21 versus zero during FY20.

The founders of Setu – Sahil Kini and Nikhil Kumar – have been members of India Stack for over six years. The initiative is a private bouquet of proprietary software applications and APIs that power most Aadhaar applications and the Digital India initiative.

Previously, Kumar co-founded Voyce, a customer feedback system for SMBs that was later acquired by Exotel, while Kini had founded Magnet Works, an industrial IoT startup.

The deal comes at a time when Pine Labs is expanding its offering beyond just merchant payments. In addition to its Point of Sale (PoS) business, where the company offers payment terminals to merchants, Pine Labs also develops Buy Now Pay Later (BNPL), invoice management, gift solutions and e-commerce solutions.

Currently valued at $5 billion, the company is also considering an initial public offering (IPO) in the US. According to media reports, it would fetch approximately $500 million on a $6-7 billion valuation of the public market.

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