MobiKwik's DRHP: Significant Aspects Include Tight Regulations, Sustained Profitability, Expanding Financial Services
Bajaj Finance-backed fintech MobiKwik is making another attempt to enter the capital markets, inspired by the current market optimism and the surge in companies initiating initial public offerings (IPOs) lately.
The payment platform, One MobiKwik Systems, has reduced its planned issue size from Rs 1,900 crore to Rs 700 crore. It has refiled the draft papers with the Securities and Exchange Board of India (SEBI) to raise funds from the public.
Initially filed in July 2021, the company's draft red herring prospectus aimed for a Rs 1,900-crore IPO.
Established in 2009 by Bipin Preet Singh and Upasana Taku, MobiKwik has around 14.6 crore registered users. Its primary revenue sources include credit offerings like personal loans, pay-later options, payment gateway charges through Zaakpay, mutual fund distribution and revenue from the peer-to-peer lending product Xtra. Additionally, the company is venturing into merchant loans and has introduced Vibe, a soundbox, enabling 8.1 crore merchants for online and offline payments.
Here are the top aspects to observe in MobiKwik’s Draft Red Herring Prospectus (DRHP), ranging from the offer details to financial performance, board members, license approvals and pending litigations:
Offer Details: MobiKwik’s IPO will entirely comprise a fresh issue of shares without an offer-for-sale (OFS) component. Key investors include Bajaj Finance, Peak XV Partners, and Net1 Applied Technologies. The company has raised approximately USD 269 million in funding since inception.
Utilisation of IPO Funds: The IPO proceeds allocation includes funding financial services growth, payment services, investments in data, ML and AI, technology enhancement and capital expenditure for the payment device business.
Financial Health: The firm reported a net loss of Rs 84 crore for FY23 but recorded a net profit of Rs 9.4 crore for the first half of 2024, with a notable operating revenue and reduced expenses.
Board Members and Remuneration: MobiKwik's listed entity has appointed key personnel like Bipin Preet Singh as Managing Director and CEO and Upasana Taku as CFO and Executive Director. Independent directors and their remunerations have been detailed in the DRHP.
Zaakpay License and Pending Approvals: MobiKwik's payments aggregator license is pending final approval from RBI. There's an acknowledgment of stiff competition from peers like Paytm and PhonePe.
DLG Impact and Pending Litigations: The platform's lending focus faces risks due to contract re-negotiation following Digital Lending Guidelines (DLG). Pending litigations against the company and its directors, along with potential penalties, present challenges.
This summarises the key areas highlighted in MobiKwik's DRHP, spanning its IPO plans, financials, leadership, regulatory challenges, and ongoing litigations.
