Pine Labs, a major player in the digital payments sector, is facing challenges with its valuation ahead of a multi-billion-dollar initial public offering (IPO).
The company is said to be targeting a valuation of $4-5 billion for the upcoming IPO.
However, initial feedback from roadshows indicates that investor interest is more in the range of $2.5-3 billion.
Valuation gap emerges post roadshows
The discrepancy between projected valuation of Pine Labs and investor expectations was revealed after several international and domestic roadshows.
These events were organized by bankers to assess the multiples investors are willing to pay for the company.
A banker, speaking anonymously to Moneycontrol, said that under current market conditions, they could stretch valuations to a maximum of $3.5 billion.
Bankers expect Pine Labs to file by end of June
Despite the valuation challenges, bankers believe Pine Labs could be ready with its IPO documentation by the end of June.
However, they don’t expect anything significant to boost the company’s valuations to the expected $4-5 billion range in the next three to six months.
Axis Capital, Citi, Morgan Stanley, Jefferies and JP Morgan are handling this IPO.
Suggestions to lower valuations not well received by management
Bankers are advising Pine Labs to opt for a lower valuation for its IPO, similar to Paytm’s 2021 listing.
They believe this would leave some room for investors and allow the market to discover valuations through a fair-priced IPO process.
However, these suggestions have not been well received by the management as they are significantly lower than the company’s last funding round in 2022.