Singapore's Fave eyes India breakthrough with US$45m sale to unicorn Pine Labs

FINTECH platform Fave is aiming to take flight in India's consumer rewards market, following its US$45 million sale to an Indian merchant commerce company, founder and chief executive Joel Neoh told The Business Times (BT).

On Tuesday, Fave announced it has been acquired by India's Pine Labs in a US$45 million cash-and-stock deal. The startup will continue to retain its leadership structure, and will enter the Indian market later this year.

Fave will hire over 100 new employees in South-east Asia and India - in roles such as sales, data and product development - to drive consumer app adoption in both regions.

It also plans to expand its present offerings to include Buy Now Pay Later (BNPL) services, starting with Singapore. Pine Labs has a strong presence in the BNPL market, Mr Neoh said.

"We are one of the first South-east Asian companies to explore going to India and we would never have dreamt of it if not for the Pine Labs collaboration," he told BT over a video call.

According to Mr Neoh, Pine Labs is one of the largest payments providers in India with 500,000 merchant network points.

Fave will be rolled out across all Indian cities and be able to process Unified Payments Interface transactions, a mobile payments system linked to bank accounts and developed by the National Payments Corporation of India.

Founded in 2016, Fave operates a payments app in Singapore, Malaysia and Indonesia that allows consumers to earn cashback rewards at participating merchants. The app itself does not have a stored value function; payments are made by linking bank cards or e-wallets.

Pine Labs, an Indian company founded in 1998, specialises in payments solutions for merchants, including point of sales platforms and BNPL services. The company has become one of India's hottest fintech players after it raised between US$75 million and US$100 million in December last year, reportedly taking its valuation past US$2 billion. Its investors include Temasek, Mastercard and PayPal.

Pine Labs announced an investment into Fave last July, as well as a strategic partnership to integrate Fave's QR code payments system into Pine Lab's terminals. Pine Labs has since found Fave to be an ideal fit for the Indian market, chief executive Amrish Rau told BT.

Fave's app combines QR contactless payments with redemption rewards and loyalty mechanisms in a "very unique" way, he said.

"From our point of view, we were trying to get into the Singapore and Malaysia markets and partnered with Fave. As we started to understand Fave, we saw the correlation of their product in the Indian market.

"So I went back and asked Joel, would you be kind enough to lead this foray for us, as we go on building deeper relationships with our merchants and consumers? And this is where the two businesses can come together," he said.

Pine Labs is widely expected to be planning an initial public offering. Mr Rau declined to comment on the matter, but he noted that part of the Fave deal involves creating a separate share plan for the management team "to ride the upside with us as we go forward".

Mr Neoh added that Fave's own employees will benefit from their Employee Share Option Plan with the deal. Fave's early investors will also enjoy an all-cash exit, "which is very preferable to them".

Backers of Fave include Sequoia Capital India, SIG Asia Investments, Venturra Capital, the Axiata Digital Innovation Fund and 500 Startups.

Fave's sale marks a milestone in the company's turnaround story. The startup traces its roots back to the South-east Asian business of the failed US group-buying company Groupon.

Mr Neoh was formerly Groupon's Asia-Pacific head, after his Malaysian business GroupsMore was acquired by the US company in late-2010. In 2015, he left Groupon to start KFit, a fitness class booking app.

KFit later acquired the Malaysia and Indonesia units of failed US company Groupon in 2016, rebranding into Fave. It subsequently added Groupon's Singapore unit to the business in 2017.

Asked about the journey thus far, Mr Neoh said: "As I reflect on it, the initial idea for a startup is never the end outcome... It's about (having the) agility and adaptability to keep pivoting."

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