Pine Labs Acquires Fave: $45 Million Deal in Southeast Asia

Pine Labs Acquires Fave for $45 Million

Pine Labs announced on Tuesday the acquisition of Southeast Asian startup Fave, in a transaction valued at $45 million. This strategic move aims to bolster the Indian firm’s consumer-focused services both domestically and internationally.

Fave's Core Functionality

Fave specializes in connecting offline merchants with their customers through the use of gift cards and vouchers. The platform facilitates digital payments via QR code scanning. Following a transaction, customers automatically receive cashback or loyalty points redeemable at the same business for future purchases.

Joel Neoh, co-founder and CEO of Fave, highlighted the platform’s dual appeal. He stated that customers appreciate the security, cashback, and rewards, while merchants benefit from increased customer acquisition and retention. Fave, also backed by Sequoia Capital India, secured over $32 million in funding prior to the acquisition.

The Impact of the Pandemic

The offering proved particularly valuable for merchants during the pandemic. Businesses sought innovative methods to stimulate sales from their existing customer base, as noted by Amrish Rau, CEO of Pine Labs. Simultaneously, consumers actively searched for cost-saving opportunities and ways to maximize their purchasing power.

Pine Labs, which provides businesses with payment terminals, invoicing tools, and working capital, previously acquired Qwikcilver, a gift card solution provider, in 2019. They initially invested in Fave last year, signaling their confidence in the startup’s potential.

Fave Compared to Honey

Rau likened Fave to Honey, the PayPal-owned browser extension. He explained that Fave is replicating Honey’s success in the online world, but for offline businesses. He emphasized that QR code technology enables effective loyalty programs, rewards, and redemption options in the physical retail space.

Future Plans and Expansion

Following the acquisition, Fave’s leadership will remain in place. The team is focused on extending Fave’s services to customers across 3,700 cities in India. This represents a notable instance of a Southeast Asian startup expanding into the Indian market.

Neoh announced plans to hire an additional 100 employees and launch a buy now, pay later (BNPL) product within the next one to two months.

Growth Potential in India

“India possesses a significant digital advantage,” Neoh stated, citing a young demographic, a growing middle class with increasing disposable income, and rising digital literacy. He expressed confidence in the continued exponential growth of the APAC e-payments landscape, and believes the combined entity will be stronger and more efficient.

Within the next 30 days, Fave Pay will be launched in India, utilizing QR code transactions. Subsequently, the team will collaborate with Pine Labs’ merchant network to deliver rewards, coupons, and redemption programs to Indian consumers.

Strategic Acquisition and Future Outlook

Rau explained that the decision to acquire Fave followed a nine to ten-month evaluation period. He believes the acquisition is a crucial step in strengthening Pine Labs’ position in the consumer market.

Pine Labs is actively exploring further merger and acquisition (M&A) opportunities, concentrating on two key areas: bridging the gap between offline and online payments, and leveraging their prepaid card offerings within new business applications.