PC: The Economic Times
In recent days, the Gurugram-based fintech company, MobiKwik filed its Red Herring Prospectus with SEBI, under the proposed fresh equity infusion worth ₹572 crore with the new issue of shares. The company, meanwhile marked its third downsizing to be carried out within initial public offerings and reflects the huge challenge being faced in its new issue due to a severe devaluation cut of around 70%.
The IPO would open for subscription between December 11 and December 13 with a price band between ₹265 and ₹279 per share. MobiKwik is going to use the proceeds of the IPO for various strategic initiatives, including expansion of the financial services business, upgrading its payments operations, and investing in research and development.
Specifically, the company has set aside ₹150 crore for the growth of its financial services business segment. It has also designated ₹135 crore for the payments business, which has been at the very core of MobiKwik’s business. Also, the fintech company will allocate ₹107 crores for research and development, especially in data science, artificial intelligence, machine learning, and product technology. For MobiKwik, this is an important investment as the company strives to innovate in a very fast-changing environment that characterizes the fintech landscape.
MobiKwik’s IPO structure: Minimum lot of one which consists of 53 equity shares worth approximately ₹14,787. The issue is so arranged as to be available predominantly for institutional investors, whereby 75% of the issue will be reserved for Qualified Institutional Buyers, and 15% will go to Non-Institutional Investors, while 10% will be retained for retail investors. Book running managers SBI Capital Markets and DAM Capital Advisors only add to the seriousness with which MobiKwik is approaching this IPO.
This move to significantly cut its valuation before the IPO launch can be considered a strategic step in attracting investors in a climate where many tech companies are facing scrutiny and fluctuating market conditions. MobiKwik lowers its initial valuation expectations to present a more attractive investment opportunity in a cautious landscape.
Despite the setbacks, MobiKwik continues to show resilience. It built a robust platform that offers an immense range of financial services, such as digital payments, lending, and insurance, reaching millions of users across India. The fintech market remains one of the world’s fastest-growing markets; increasingly, smartphone penetration coupled with a growing middle class and government initiatives have stimulated digital payments.
In all, MobiKwik’s upcoming IPO marks a defining moment for the company in terms of its ability to garner the necessary capital to drive its growth aspirations in the competitive fintech space. The huge valuation haircut does pose a question, but at the same time, it is a very pragmatic approach in light of current market dynamics. This would bring all eyes on investor response and the potential for MobiKwik to emerge stronger in the post-IPO landscape. The upcoming subscription period would be crucial in determining its trajectory in the fast-evolving fintech arena.
