Why Pine Labs chose to acquire gift-card solutions provider Qwikcilver for $110M
Digital retail payments provider Pine Labs is all set to acquire Qwikcilver. Post-acquisition, Qwikcilver will continue to operate as a separate entity for 6-9 months. But why did Pine Labs make this acquisition at this stage?
Gurugram-based merchant fintech platform Pine Labs has signed a definitive agreement to acquire Bengaluru-based gift card solutions provider Qwikcilver. The deal is set for over $110 million, and is subject to few closing conditions.
Founded in 2006, Qwikcilver works as a full-stack gift card service provider and is already managing an annualised gross transaction value of $1.5 billion across India, the Middle East, and Southeast Asia.
Post-acquisition, Kumar Sudarsan, Co-founder and CEO of Qwikcilver, will be joining Pine Labs' leadership team. For the next 6-9 months, the teams will focus on revenue synergies for both the businesses, and Qwikcilver will continue to work as an independent unit.
According to the Pine Labs team, the transaction has been funded using the company’s cash reserves, and additional funding from existing investors. With this acquisition Pine Labs plans to integrate Qwikcilver’s software-as-a-service (SaaS) platform with Pine Lab’s merchant focussed payment solutions.
Vicky Bindra, CEO Pine Labs
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Helps bring a host of merchants
On why his company chose to acquire Qwikcilver, Vicky Bindra, CEO, Pine Labs, tells YourStory, “It just isn’t about the team and how they have been able to scale the business but also how they have been able to keep their operations frugal, and build high quality technology. They are the de-facto business for any company.”
Then there is the opportunity to combine Pine Labs’ gift card solution Pine Perks with the SaaS technology of Qwikcilver. Vicky explains,
“Qwikcilver has merchants like Flipkart, Amazon, and other online players, thanks to their SaaS system. So the acquisition will help us gain access to the online partners. Apart from that their merchant network in regions like the UAE, and Malaysia is strong, and as we look at expansion in the region, the connect will help us.”
Pine Perks is at present being used by over 600 organisations in the telecom, FMCG, manufacturing, pharma, manufacturing, insurance, and banking sectors.
According to market estimates, gift as a category is growing at a high double-digit rate of 30-50 percent annually.
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A strong distribution channel
There also are revenue synergies between the two firms, and while there are competing products, in terms of numbers, both work with over 600 corporates each.
“One of the biggest advantages of Qwikcilver is their processes, and distribution. While Pine Labs has a strong merchant network, Qwikcilver has market-leading processing and distribution capability. They process the entire scale of the transaction. If a consumer uses an Amazon gift card, every part of that transaction that happens on the backend and its entire processing is handled by Qwikcilver.”
Pine Labs says that post-acquisition of Qwikcilver, the combined gift solutions business will touch over 250 brands and retailers, and over 1,500 enterprise customers, making it one of the largest gifting solutions in the country. The solution will be deployed across all of Pine Labs markets in India, and Southeast Asia.
Strong synergies
Commenting on the transaction, Qwikcilver CEO Kumar says, “We have built a robust and versatile stored value and gift card technology platform. We have also built a strong network and enduring strategic brand relationships with the best brands in India in the Middle East and in the Southeast Asian markets. With Pine Labs, we have the potential and ability to significantly scale the gift card category, and drive consumer adoption with novel products and solutions. We are very excited about taking the next step in our journey with Pine Labs.”
At present, Pine Labs has over one lakh merchants as clients, and has deployed more than 3.3 lakh PoS terminals. The company also boasts of $16 billion in annualised payments value, and claims to have facilitated $1 billion worth of customer credit through debit and credit cards.
The gift cards and vouchers category in India currently stands at more than Rs 2,000 crore, and is expected to reach Rs 8,000 crore. The space has seen a steady growth over the years but no player has emerged as a dominant force. Broadly, these startups also compete with ecommerce players. Among the other players from this segment is GiftCardsIndia, which had earlier acquired Giftery.
There also is Mumbai-based Zaggle, which pivoted from being a gift card provider to a digital payments, cashback and analytics company, and is helping companies and retailers score big on customer loyalty.
Besides gift cards, Pine Labs also provides short-term (zero to 90 days) financing, and weekend credit to merchants to help them meet working capital and inventory needs. Pine Labs is also partnering with leading NBFCs to provide retailers access to easy and collateral-free business loans. Merchants have the option to repay these loans by choosing a flexible amount from daily card sales on Pine Labs’ PoS terminal.
