MobiKwik announces IPO: Here’s everything you need to know

By Angel Broking | Published on 15th July 2021 | 87

The digital payments giant MobiKwik has filed DRHP with SEBI to raise Rs 1900 crore through an IPO. As per the draft document, the company will raise Rs. 1500 crores from the sale of primary shares. Additionally, it will raise a maximum of Rs. 400 crores through the sale of secondary shares held with existing investors.

The leading mobile wallet and Buy Now Pay Later service provider is popular for its multifarious services and convenient payment options. Along with its subsidiaries, Zaakpay and MobiKwik Zip, this company aims to simplify online payments for its users. 

Since the IPO is in its initial phases, let us try to find out more about its scope and details below.

Primary objective of MobiKwik IPO

The primary objectives of this initial public offering are discussed below:

  • To repay or prepay existing debt either partially or in full
  • To address organic and inorganic growth prospects
  • For meeting corporate objectives

That said, let us take a quick look at some crucial IPO details.

Check MobiKwik IPO details here!

MobiKwik is planning to push its valuations to $1 billion with this upcoming IPO. Besides its valuation-oriented target, the other noteworthy details of MobiKwik IPO are highlighted below:

 

  • Issue type – Book built type
  • Listing – NSE and BSE
  • IPO price band – Unannounced 
  • Face value – Rs. 2/share
  • Market lot – Unannounced
  • Minimum order quantity – Unannounced

 

This table will offer you a clear idea about the basis of allotment across different investor categories.

Investor Category % of shares
Qualified institutional buyer 75%
Non-institutional investor 15%
Retail investor 10%

You should note that the allotment of equity shares will be subject to the issuance of new shares and transfer of promoter shareholders’ offer for sale shares to bidders. Additionally, remember that the status of the allotment is yet to be announced. 

MobiKwik’s financials at a glance

In the fiscal year ending on 31 March 2021, MobiKwik’s losses increased by 12%. Accordingly, its earnings dropped by a sharp 18%. 

Take a look at its financials from FY2019 to FY2021.

Financial year Total Assets Total Revenue  Loss after tax
2020-21 Rs. 423.14 crore Rs. 302.26 crore Rs. 111.30 crore
2019-20 Rs. 337.94 crore Rs. 3,69.85 crore Rs. 99.92 crore
2018-19 Rs. 335.08 crore Rs. 160.23 crore Rs. 147.97 crore

MobiKwik’s merchant bankers and more

As per the DRHP, MobiKwik has already appointed these merchant bankers for its upcoming IPO:

  • ICICI Securities
  • IIFL Securities
  • Jefferies India
  • BNP Paribas
  • Credit Suisse Securities (India) Private Limited

On the other hand, big names such as Bajaj Finance, Cisco, Sequoia Capital India, Tree Line, and Amex are its investors. 

Now that we have become familiar with the core information about this upcoming IPO, let’s glance through the company’s competitive strengths in brief.

MobiKwik’s competitive strength

Go through the list to understand whether MobiKwik is worth your time and attention or not.

  • MobiKwik has over 107 million registered users.
  • MobiKwik carries out nearly 1 million transactions in a day across its various services.
  • It has a robust network of 3.44 million billing merchants (based online and offline).
  • MobiKwik offers small-ticket loans, insurance policies, and American Express-powered credit cards. 

Final Takeaway

The annual statements for FY2019 to FY2021 has raised several questions about the company’s financial standing and sustainability. In case MobiKwik falters to hold on to its existing customer base or is unable to expand its footprints in the market, the scope for its growth will be limited. This could lead to a decline in the company’s operations and, in turn, lower its revenue. 

Then again, currently, no other publicly-traded company in this market offers such a diverse range of services. There is hardly another company that operates on a scale as large as this virtual platform. Thus, investors can rely that such aspects would favour the company’s market share once it acquires the necessary funding via this upcoming IPO. 

 

Frequently asked questions

 

  • What will be the secondary share sale contribution to MobiKwik IPO?

 

The secondary share sales which allow existing investors to sell their units will contribute Rs. 400 crores.

 

  • What is the target valuation MobiKwik plans to achieve for the IPO?

 

The targeted valuation is more than $1 billion.

 

  • How does MobiKwik plan to use the IPO proceeds?

 

MobiKwik plans to use the IPO proceeds to fund merchant acquisition and customer retention.  It also plans to invest in R&D and tech teams.

 

  • What is the composition of fresh issue of shares in MobiKwik IPO?

 

MobiKwik IPO will include a fresh issue of equity shares amounting to Rs. 1500 crores. 

 

  • Will the number of MobiKwik equity shares be reduced after pre-IPO placement?

 

It seems once the pre-IPO placement is completed the equity shares issued post-placement will be reduced from fresh issue.