MobiKwik IPO Delayed, Company Explores Private Funding

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Digital payment solutions player MobiKwik has raised debt funding INR35 crore from private equity investor Blacksoil Capital, according to a report by Entrackr. It is noteworthy that MobiKwik IPO prospectus was filed with SEBI more than a year ago but the recent spate of funding rounds indicates that the public offering might have been pushed further the line.

As per a filing made with the Registrar of Companies (RoC), the board of MobiKwik has decided to distribute 700 non-convertible debentures (NCDs) at an offer price of INR5,00,000 apiece to raise INR35 crore.

This comes at a time when MobiKwik, which has postponed its IPO due to challenging market conditions, is aiming to raise USD100 million. Previously, in June 2021, the firm had raised USD20 million from the sovereign wealth fund Abu Dhabi Investment Authority. 

MobiKwik’s latest valuation following the last round of funding was roughly USD$736 million, but it jumped to USD1 billion in a recent ESOP sale. 

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MobiKwik filed its DRHP in July 2021 with a view to raise INR1,900 crore, including a primary sale of INR1,500 crore. However, the disastrous Paytm IPO and the underwhelming results of Zomato and other companies nudged other venture-funded startups, particularly fintechs, to postpone their market debuts. 

Mobikwik Ipo
Mobikwik IPO

MobiKwik has lately struggled in regulatory circles, especially regarding the payment aggregator license with the RBI. MobiKwik is among the 100 fintechs whose application has been rejected by the central bank. Its flagship product didn’t meet the net worth requirements and was also found to have offered its gateway service for cryptocurrency transactions. 

According to the DRHP, MobiKwik’s revenues and earnings took a beating in FY2021. While its top line declined 18.3% to INR302.3 crore in FY2021, it reported a loss of INR111.3 crore in the same timeframe. The company is yet to file updated financial statements for FY2022. The company’s three main revenue-generating categories are consumer payments, payment gateways, and buy now pay later (BNPL).

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MobiKwik IPO likely pushed to backburner

The fintech company is currently in talks with multiple investors to raise funds in a likely sign that its MobiKwik IPO is now deprioritized. As it delays its IPO aspirations, Mobikwik seeks to raise USD100 million, with the founder claiming that the “markets are not ready.” The company intends to use the increased capital for marketing initiatives, employee hiring, and business acquisitions.

Meanwhile, recent startup listings of CarDekho and Zomato and others have failed to reward IPO investors, making it difficult for IPO aspirants like MobiKwik. Primarily, the startups have struggled to demonstrate a path to profitability which has irked public markets, sending the stock prices lower. On this front, there is little hope that the MobiKwik IPO will materialise anytime soon. 

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