MobiKwik's Financial Blueprint for IPO

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Nadeesh Kareemdathil, Apoorva Bajj

Jan 12, 2024 — 4 min read

MobiKwik's Financial Blueprint for IPO

MobiKwik, the payment platform, has submitted its Draft Red Herring Prospectus (DRHP) to the Securities and Exchanges Board of India (SEBI), indicating its intention to launch an initial public offering (IPO) with the aim of raising ₹700 crore. The Gurugram-based company plans to generate the funds through a fresh issue of equity shares with a face value of ₹2 each, as specified in the DRHP. Unlike the first attempt in July 2021, this filing exclusively involves a fresh issue, with no offer for sale (OFS) component.

According to the DRHP, MobiKwik will conduct a pre-IPO placement of shares valued at approximately ₹140 crores before the official IPO launch, in collaboration with the book-running lead managers (BRLMs), namely SBI Capital Markets Limited and DAM Capital Advisors Limited. The registrar of the issue is identified as Link Intime India Private Limited. The proposed listing of MobiKwik's equity shares is intended on both the BSE and NSE.

While the DRHP has been submitted to SEBI, specific details such as the MobiKwik IPO price band, lot size, and dates are pending finalization. These details will be disclosed in the Red Herring Prospectus (RHP) once it is made public post-approval.

The ₹700 crore IPO, consisting solely of a fresh issue, outlines the allocation plan, designating 75 percent of shares for qualified institutional buyers, 15 percent for non-institutional investors, and up to 10 percent for retail individual buyers.

Regarding the utilization of the funds raised, the DRHP specifies MobiKwik's intentions. Notably, ₹250 crore will be directed towards funding growth in the financial services business, while ₹135 crore is earmarked for expansion in both payment services and data and AI segments. Additionally, over ₹70 crore is allocated for capital expenditure. The document emphasizes the management's discretion in deciding specific activities funded by the net proceeds, citing an example of utilizing ₹100 crore for acquiring new consumers and merchants on their platform.

Corporate Profile
Company Strengths
Company Risks
Leadership at MobiKwik

Corporate Profile

Established in 2009, One MobiKwik Systems emerges as a player in the fintech sector, boasting ownership of MobiKwik, one of India's largest mobile wallets, and venturing into the Buy Now, Pay Later (BNPL) domain. As of March 31, 2021, the MobiKwik app boasts more than 101.37 million registered users and has affiliations with over 3.44 million eCommerce and brick-and-mortar retail billers. The company's core operations revolve around three key business verticals: Buy Now, Pay Later (BNPL), Consumer Payments (MobiKwik wallet), and Payment Gateway (Zaakpay).

Within the BNPL vertical, One Mobikwik Systems oversees two brands, MobiKwik Zip and Zip EMI, offering small-ticket credit facilities. In the Consumer Payments sector, the company manages the widely used MobiKwik wallet, enabling users to settle payments for various products, services, and utility bills. The Payment Gateway vertical is steered by Zaakpay, providing comprehensive payment processing solutions catering to businesses of varying sizes.

Despite losses in the last three fiscal years (FY19, FY20, and FY21), One MobiKwik Systems Ltd experienced robust revenue growth, with FY21 revenues reaching ₹303 crore—more than doubling over the past two years, reflecting resilience and growth amid the pandemic.

Company Strengths

One Mobikwik Systems Limited possesses several key strengths, that differentiate it from competitors. Notable strengths include a substantial active user base with a low Customer Acquisition Cost (CAC), robust growth across all business verticals, the widespread recognition of MobiKwik as a popular brand in the country, and a technology-centric approach.

Company Risks

Outlined in the Draft Red Herring Prospectus (DRHP), One Mobikwik Systems Limited acknowledges certain risks to its business. Key considerations include the intensely competitive and rapidly evolving nature of the Indian fintech industry, potential threats to platform security, the risk of data breaches leading to the exposure of personal and confidential information, challenges in attracting new customers or merchants, and difficulties in expanding existing relationships with customers and merchants.

Leadership at MobiKwik

The CEO and MD at MobiKwik is co-founder Bipin Preet Singh, an alumnus of IIT-Delhi with an MBA from Harvard Business School. Serving as the executive director, chairperson, and CFO is Upasana Taku, a graduate of the London School of Economics and Political Science.

Heading MobiKwik’s payments division is Chandan Joshi, who joined the fintech startup in 2018. Holding a bachelor’s degree in textile technology from IIT Delhi and an MBA from London Business School, Joshi is instrumental in building the company’s consumer payments business. He previously cofounded Anatole Solutions Private Limited in 2012 and served as the business head of PTAP Delivery Solutions Private Limited. His professional experience extends to roles at Credit Suisse Securities (Europe) Limited and Futures First Info Services Private Limited.

Key members of the company include Anurag Jain, the VP of lending and data, responsible for risk management, credit underwriting, and collection supervision in the lending business. Mohit Narain, the COO of consumer payments, joined MobiKwik in 2018 and has been in his current position since 2023.

Saurabh Dwivedi, the senior VP of technology, joined MobiKwik in 2023 and leads the company’s engineering teams. Ankita Sharma, the compliance officer, and company secretary at MobiKwik, is an associate member of the Institute of Company Secretaries of India, bringing valuable expertise in compliance and company secretarial matters.

As of September 30, 2023, MobiKwik reported a total of 1,233 employees, including 604 permanent employees and 629 contract employees.

Expressing concerns over the size and aggressive valuations of the Paytm IPO, the promoters highlight challenges faced by smaller-sized IPOs like MobiKwik operating in a similar niche.

BNP Paribas, Credit Suisse Securities India, ICICI Securities, IIFL Securities Ltd, and Jefferies India Private Ltd will manage the IPO as book running lead managers (BRLMs), with Link Intime Private Limited serving as the designated registrars to the issue.

Despite initial plans being solidified in the Dec-21 quarter, the IPO was deferred following the subdued listing of Paytm. SEBI approval, valid for a year, provides MobiKwik with flexibility in timing its IPO.