Exclusive: PagarBook to acquire Indonesian peer Vara

Employee management app PagarBook is all set to acquire Indonesian staff management application Vara in a stock deal.

Singapore-registered Vara was a part of the fifth cohort Sequoia India accelerator program Surge whereas Bengaluru-based Pagarbook was selected in the fourth batch of the 16-week-long program.

Pagarbook’s board has passed a resolution to acquire the securities of Vara Technologies from their shareholders, the company’s regulatory filing with the Registrar of Companies (ROC) shows. According to the filings, PagarBook has offered 122 equity and 1,006 Series A4 CCPS having price of Rs 3,88,030 per share amounting to Rs 43.7 crore or $5.6 million against the shares of Vara.

Founded in November 2020 by Vidush Mahansaria and Abhinav Karale, Vara is also focused on making staff management easier for small businesses and their workers with its flagship app called Bukugaji. In July 2021, the company announced a $4.8 million seed round from Go Ventures, RTP Global, AlphaJWC, Sequoia Capital India’s Surge, FEBE Ventures and Taurus Ventures. The company primarily targets the Indonesian market.

This is clearly a stress deal for Vara as it took a sharp haircut in valuation. As per Fintrackr’s estimates, the company was valued at $15.5 million during its seed round whereas PagarBook has acquired it in a $5.6 million all-stock deal.

It’s worth mentioning that Vara and Bukugaji’s websites throw up an error when one attempts to log in through its website. According to Sensor Tower data, Bukugaji has garnered around 1.27 million downloads since its launch, mainly from Indonesia.

The development comes at a time when PagarBook is struggling to raise a new round after pulling in $15 million in Series A in December 2020. The Adarsh Kumar and Rupesh Sharma-led startup also raised a small tranche in June 2021 at a valuation of over $100 million. However, the company did not raise any further money in the round. During the same time, it also laid off around 80 employees.

A couple of startups such as OkCredit and Khatabook also entered the employee management space to counter PagarBook but both companies had abandoned their ambition in the staff management space. OkCredit’s OkStaff discontinued its operations while Khatabook had shut down Pagar Khata as it has narrowed down the focus to its core bookkeeping and fintech initiatives.

While it is difficult to predict just what PagarBook saw in Vara finally, it is a given that the employee management space is a cutthroat market with hundreds of players, big and small. Owing to the very nature of the business, getting in is the toughest part, as firms are obviously reluctant about changing service providers too frequently. That is also the reason why many prospects scrutinize options very carefully before committing, a chicken and egg situation if there ever was one.