Pine Labs, Zepto, Meesho in queue for India return

Pine Labs and Zepto are the latest new-age companies looking to move headquarters to India.

Payments major Pine Labs is seeking approval for a cross-border merger of its Singapore-based holding company with its Indian operations, and has approached the National Company Law Tribunal (NCLT) as well as regulatory authorities of the island nation, filings show. Quick commerce firm Zepto is in the final stages of filing a similar application, according to people in the know.


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Meanwhile, Meesho is also exploring raising fresh funding to meet the additional tax payout on returning to India, people briefed on the matter said.

Indian-origin companies looking to move base from the US or Singapore face a hefty levy. The etailer has been reviewing options to shift its holding company from the US to India, as reported by ET earlier.

Industry watchers said several firms are looking to move domicile back to India in order to gain from the rising valuations that domestic public markets offer technology ventures.

Pine Labs’ proposal is under consideration in Singapore, while it awaits an NCLT hearing back in India later this month, according to filings. The company was last valued at $5 billion. “How the Singapore authorities clear the cross-border merger will pave the way for others too. It’s (the application) moving steadily now,” a person aware of the matter said.

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ET first reported on January 2 about Pine Labs’ plans to approach its board for approval on the cross-border move.

Multiple people aware of Zepto’s plan to bring domicile here said it has been in the works “for months now… The most efficient tax option will be chosen.” The Singapore-based firm was valued at $1.4 billion after raising $200 million last year.

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Pine Labs, Zepto and Meesho declined to comment on the matter.

The tax implications of such moves, however, are a concern. These companies will have to pay taxes in those markets or in India, depending on the route they choose. The quantum will depend on the company valuation and a third-party audit.

“Meesho has adequate cash in the bank, but has been advised not to use it for flipping. If they prefer to come here, they will have to do a new raise,” said another person briefed on plans of the startup backed by SoftBank and Y Combinator. The reserves are likely to instead be used for countering upcoming competition.

At the time some of these companies were set up, quick and adequate funding were hard to come by locally. As a result, many startups turned to foreign investors, which required them to set up holding companies overseas. “In hindsight, this is becoming a big issue,” said one founder.

ET reported in November that Razorpay may have to cough up $300 million in US taxes. In February, its chief executive Harshil Mathur told ET that while flipping tax is high, the company has accounted for it.

Earlier, Walmart paid nearly $1 billion in taxes to the Indian government during separation of PhonePe from parent Flipkart and the return of its holding company to India.

ET also reported on January 22 that a group of Indian origin firms with foreign domicile had taken legal advice and met finance minister Nirmala Sitharaman over the matter.

Nonetheless, the prospect of handsome valuations remains huge incentive. “It’s clear the public markets are valuing companies on 12-18 month forward-looking revenue or Ebitda numbers, at certain multiples, depending on the sector,” an entrepreneur who is also considering reverse flipping told ET.

“If not profitable now, they have laid out plans to (for a profit) in the next financial year. The same appetite (valuation) for those particular businesses is not there in foreign markets,” he said. “A consumer brand or an ecommerce firm with a brand recall in India will be valued much more here.”

For fintech companies, regulations favour a move back to India.

Roy Walsh

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