Online payments firm MobiKwik has received approval from the Securities and Exchange Board of India to raise Rs. 1900 crores ($255 million) via IPO (Initial Public Offering). According to their draft papers, the IPO will consist of a fresh issue of shares worth Rs. 1500 crores and an offer for sale (OFS) worth Rs. 400 crores.
The MobiKwik IPO is likely to launch before Diwali (4 November 2021) or by the end of October 2021. The company has not decided the price band of this IPO yet, but its valuation will be at least $1 billion.
Let us take a deep dive into the particulars of the MobiKwik IPO.
About the Company- MobiKwik
MobiKwik is one of India’s largest digital wallet providers and Buy Now Pay Later (BNPL) players. Founded by Upasana Taku and Bipin Preet Singh in 2009, the company started as a mobile wallet, where customers could add money and use it for payments. In 2016, MobiKwik expanded its operations, providing small loans to consumers.
MobiKwik offers the following services:
- Accepting payments
- Money transfer
- Mobile phone recharges
- Ecommerce shopping
- Payment of utility bills (electricity, broadband, DTH etc.)
- Petrol pumps
- Large retail chains
- Food delivery
- UPI (United Payment Interface) payments
- MobiKwik Zip (BNPL product)
Over the years, the company has amassed over 101 million registered users on its platform and more than 3 million business partners for ease of payments.
Overview of the MobiKwik IPO
With the upcoming IPO, MobiKwik would be the first online payment company listed on Indian stock exchanges. This company had filed a draft red herring prospectus (DRHP) to SEBI to raise Rs. 1,900 crores on 12 July 2021. It will consist of a fresh issue worth Rs. 1500 crores and an OFS of Rs. 400 crore by existing shareholders and promoters.
The shareholders participating in this IPO are:
- Bipin Preet Singh- Rs. 113.33 crores
- Upasana Taku- Rs. 78.82 crores
- Sequoia Capital- Rs. 95 crores
- Bajaj Finance- Rs. 68.98 crores
- Tree Line Asia Master Fund Pte- Rs. 24.41 crores
- Cisco Systems- Rs. 11.48 crores
- American Express Travel Related Services- Rs. 9.98 crores
The book running lead managers of this issue will include BNP Paribas, ICICI Securities, IIFL Securities, Credit Suisse, and Jeffries. Link Intime India Private Limited will be the registrar for the MobiKwik IPO.
The company intends to use proceeds from this IPO to fund initiatives for organic growth and apply for more licenses and authorisations.
Financial Status of the Company
As of 31 March 2021, MobiKwik reported over 10% higher losses compared to the previous fiscal. The effects of the pandemic and its resulting impact on businesses caused losses of Rs. 110.9 crores compared to Rs. 99.1 crores in last year.
Its revenue from operations fell to Rs. 288.5 crores in FY21 as against Rs. 355.6 crores in the previous year. Consequently, the fintech spent Rs. 404 crores in the last fiscal, which is 11% lower than Rs. 454 crores spent in the previous financial year. Besides a 20% fall in revenues, its income fell to Rs. 302 crores in FY21 from Rs. 369 crores last year.
Following the loss due to the Covid-19 pandemic, MobiKwik has turned to the stock market to get the necessary funds for business growth. Recently, there have been many record-breaking stocks, and MobiKwik may be able to advantage of positive market sentiment.
However, you may want to be cautious and perform adequate research before buying these shares, as such investments always carry some risks.
Frequently Asked Questions
- When is the MobiKwik IPO going to open?
According to sources close to the company, it may open by the end of October 2021 or the beginning of the next month.
- Will there be a primary and secondary share sale of this IPO?
Yes. The primary share sales will be worth Rs. 1500 crores, while the remaining shares will be sold by existing investors via a secondary sale.
- What is the investors’ portion of this IPO?
The reserved investors’ portions will be as follows:
- Qualified Institutional Investors (QIB) – 50%
- Non-Institutional Investors (NII)- 15%
- Retail investors- 35%