Mobikwik refiles draft papers as it trims IPO size down to Rs 700 cr

Fintech player MobiKwik, which plans to raise Rs 700 crore, has refiled its draft red herring prospectus (DRHP).

With the second filing of the DRHP, the company is planning to mop up less than half of what it had aimed to raise earlier.

Earlier in 2021, the Peak XV-backed company had filed a DRHP with a target to raise Rs 1,900 crore. However, the company had to abandon its plan due to weak market conditions.

The husband-wife duo founders of Mobikwik — Bipin Singh and Upasana Taku — will not be selling any of their shares.

The DRHP said the initial public offering (IPO) will consist entirely of a fresh issue of Rs 700 crore, with a face value of Rs 2 per equity share. It will not have an offer for sale (OFS) component. The company may also consider a pre-IPO placement amounting to Rs 140 crore.

The Gurugram-based company said that of the proceeds, it will use Rs 250 crore for growth, Rs 135 crore for financial and payment services business, and Rs 135 crore for investment in data, artificial intelligence and machine learning (AI/ML) as well as product and technology. About Rs 70 crore will be used as capital expenditure for its payment devices business and general corporate purposes.

According to the DRHP, Mobikwik has around 146.94 million registered users as of financial year 2023-24 (FY24).

It is behind PhonePe with 500 million registered users, Paytm with 300 million and Freecharge with 155 million (Freecharge has been acquired by Axis Bank).
Currently, MobiKwik’s promoters Singh and Taku own 19.26 per cent and 13.09 per cent in the company, respectively. Others include Narinder Singh Family Trust and Koshur Family Trust, which own 0.36 per cent and 0.25 per cent, respectively.

Meanwhile, this is not the first time a company has trimmed its size after resubmitting IPO documents to Sebi. The company has seen a steady increase in its Buy Now, Pay Later (BNPL) offering known as Zip. In 2023, it disbursed loans amounting to Rs 4102.8 crore, up from 1348.5 crore in 2022. In the first half of financial year 2024 (H1FY24) alone, it disbursed Rs 2759.5 crore via the aforementioned offering.

Pune-based Emcure Pharmaceuticals’ proposal included a fresh issue of Rs 1,100 crore in August 2021. The company refiled for an IPO with plans to raise up to Rs 800 crore in December 2023, representing a nearly 30 per cent decrease.

In an interaction with Business Standard in September 2023, Taku, who is also the chief operating officer (COO) of MobiKwik, had said the company had dropped its plans for an IPO in 2021 as the market was weak.

“When we were going at it (the IPO) last time, we were at the end of the queue in terms of approvals from Sebi. Before us, there were multiple IPOs. At the end of it, you could see a waning of the market’s appetite,” Taku said last year.

The company has posted two consecutive quarters of profit, clocking Rs 5 crore in profit after tax (PAT) in Q2 FY24, as compared to Rs 3-crore profit in Q1 FY24.

Revenues grew 17.5 per cent to Rs 208 crore in Q2 FY24 from Rs 177 crore in the previous quarter. In Q1 FY24, the company had announced a 68 per cent quarter-on-quarter (Q-o-Q) growth in revenue to Rs 177 crore.

Similarly, in FY23, revenue from operations had increased to Rs 539.47 crore against Rs 526.56 crore for FY22. The company had seen its losses getting trimmed from Rs 128.16 crore to Rs 83.81 crore during the same period.

The fintech company offers payments and financial services such as online checkout, Kwik QR scan and pay, MobiKwik Vibe (Soundbox), and Merchant Cash Advance, among other financial products.

It claims to have a user base of 146.94 million along with 3.81 million merchants to conduct online and offline payments as of September 2023.