India's fintech investment surges in H1 despite pandemic

Written by Kapronasia || September 09 2020

The pandemic didn't stop India's fintech investment from surging year-on-year in the first half of 2020. A new KPMG report shows that Indian fintechs raised US$1.7 billion from January to June, more than double the US$726.6 million during the same period a year ago. There were 70 deals in total.

Covid and the rush to cashless payments aside, India has long been an attractive market for fintech investment. PwC and India's ASSOCHAM estimate that India's payments market will grow by more than 200% to US$135 billion by 2023. There is no larger market except for China, and India is expected to surpass China in population by 2027, according to the United Nations 2019 World Population Prospects report. And unlike China, the subcontinent initially opened its fintech sector wide to foreign investment. U.S. and Chinese tech giants as well as Japan's SoftBank are major players in India fintech.

In the first half of the year, three mega-deals accounted for than half of India's fintech investment: a US$398 million angel investment in digital consumer lending app Navi Technologies, payment solutions provider Pine Labs' US$300 Series H round and PayU's US$185 million acquisition of PaySense.

The Mastercard-led Pine Labs deal helped the company reach unicorn status, with a valuation of US$1.2 billion. Pine Labs says it processes US$30 billion in payments annually and serves 150,000 merchants across 450,000 "network points" across Asia.

Indeed, Pine Labs is one of the few Indian fintechs to venture outside of its home market. In July, Pine Labs invested an undisclosed sum in Malaysia-based loyalty platform Five, a provider of QR payments and loyalty cashback to restaurants and retailers. Under the agreement, Pine Labs' payment terminals will allow Fave to expand into debit and credit cards platforms, while Pine Labs' merchant customers in Southeast Asia will have access to Fave's loyalty solutions and cashback programs.

Pine Labs is reportedly mulling an acquisition of disgraced German payments firm Wirecard's Asia business, which serves about 20,000 merchants in India, Australia, Hong Kong, Singapore, Malaysia and Indonesia.

Pine Labs has neither confirmed nor denied speculation about its interest in Wirecard. Its CEO Amrish Rau said in a statement, "Pine Labs is a leading payment and installment provider in India and South East Asia. We continue to expand our footprints. We wouldn’t like to comment on this topic."

Meanwhile, Amazon is accelerating its push into India, where it has 100 million registered users and stakes in the startups Qwikcilver, BankBazaar, Tapzo, Capital Float and Acko. In July, Amazon launched auto insurance in India, followed by gold investment products in August.