SBI does another interesting investment. This time into Pine Labs.

The bank is making a $20 mn investment into Pine Labs (PL).

Key points to note –

  • In May-July 2021, PL was valued at $3.5 bn when it had raised $ 600 mn from reputed investors including Fidelity, Blackrock and others. Later in September it had raised another $100 mn from Invesco at an undisclosed valuation.
  • PL, backed by Sequoia, Temasek, PayPal and Mastercard, offers merchants payments terminals, invoicing tools and working capital.
  • The Company is expected to go for US listing this year. Last year, the expected IPO valuation was around $5 bn. However, given investors’ interest into this segment, I would not be surprised if it happens much higher.

Valuation against SBI’s $20 mn has not been disclosed. PL has said that the funds would be used for scaling Plural – it’s newly launched brand of online payment products.

My take on SBI’s investment.

  • $20 mn is nothing for PL.
  • Something seems to be changing at SBI. Recently it had also made an investment of Rs 100 crore into JSW Cement. Now $20 mn in PL. In terms of amounts, these are immaterial for SBI.
  • I personally believe, SBI has realised it’s value of being the largest bank in India. It has a wide established network and enjoys an unshakeable trust from the customers and the businesses (of all sizes).
  • Maybe it has started asking for it’s pound of flesh. To someone like PL, giving away a negligible stake in return of this leverage works very well. SBI in return would expect to make additional money on these investments.

Above strategy may not strictly be in line with what Reserve Bank of India (RBI) expects Indian banks to pursue. However, private banks have been doing this for ages and I don’t see any reason why SBI should not do it.

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