Mobikwik, a leading digital payment platform in India, has recently received approval from the Securities and Exchange Board of India (SEBI) to launch its initial public offering (IPO), targeting a substantial ₹700 crore. This marks a pivotal moment for the Gurugram-based fintech company, which has been navigating the complexities of the IPO process since its initial attempt in July 2021.

IPO Overview

The upcoming IPO will consist entirely of a fresh issue of equity shares, with no component for an offer for sale (OFS). According to the Draft Red Herring Prospectus (DRHP), the shares will have a face value of ₹2 each. The allocation strategy for the shares is designed to cater to various investor categories: 75% will be reserved for qualified institutional buyers, 15% for non-institutional investors, and the remaining 10% for retail individual investors. This structure aims to ensure broad participation in the offering.

Fund Utilization Plans

Mobikwik has outlined specific plans for how it intends to utilize the funds raised through this IPO:

• ₹250 crore will be directed towards expanding its financial services business.
• ₹135 crore is earmarked for enhancing its payment services.
• Additional investments will support growth initiatives in data and artificial intelligence.
• Over ₹70 crore will be allocated for capital expenditures.

These allocations reflect Mobikwik’s strategic focus on strengthening its market position and enhancing its service offerings within the competitive fintech landscape.

Market Context and Timing

The approval from SEBI comes at a time when there is growing investor interest in technology and fintech sectors in India. Mobikwik’s strategic emphasis on digital payments and financial services places it favorably within this rapidly evolving market. The company had previously filed its DRHP with SEBI but withdrew it due to challenging market conditions before refiling in January 2024.

Industry experts speculate that Mobikwik may launch its IPO before Diwali, which falls on November 4 this year, taking advantage of favorable market conditions. The book-running lead managers for this IPO are SBI Capital Markets Limited and DAM Capital Advisors Limited, while Link Intime India Private Limited will serve as the registrar.

Competitive Landscape

Founded in 2009 by Bipin Preet Singh and Upasana Taku, Mobikwik initially started as a digital wallet but has since evolved into a comprehensive fintech platform offering services such as credit, insurance, and gold loans. The company has garnered significant backing from prominent investors including Sequoia Capital India, Bajaj Finance, American Express, Cisco Systems, and Abu Dhabi Investment Authority.

Mobikwik faces competition from other fintech giants like Paytm, which is also preparing for an IPO. Paytm’s parent company, One97 Communications, has filed its own DRHP aiming to raise ₹16,600 crore through a combination of fresh issues and an OFS.

Future Outlook

While specific details regarding the price band and lot size of Mobikwik’s IPO remain to be finalized, the approval from SEBI is a crucial milestone in the company’s journey toward becoming a publicly traded entity. With a last reported valuation of approximately $700 million following a funding round earlier this year, Mobikwik is eyeing a valuation that could exceed $1 billion upon its public listing.

This IPO represents not only an opportunity for Mobikwik to enhance its market presence but also reflects broader trends within India’s burgeoning digital economy as consumer preferences increasingly shift towards online transactions and financial services. As Mobikwik prepares for this significant transition, it aims to solidify its position as a key player in India’s fintech ecosystem.