MobiKwik, which got market regulator SEBI’s green signal earlier this week to launch its Rs 1900 crore initial public offering (IPO), becomes the 32nd Indian unicorn this year after completing a secondary transaction valuing the digital payments startup at $1 billion.
The transaction was backed by former Blackstone India head Mathew Cyriac, who doubled down on his MobiKwik investment, purchasing shares at nearly double the price he previously paid in the startup earlier this year, according to a source familiar with the matter.
The Gurgaon-based digital payment startup reported in September that it has allocated 4.5 million equity shares, or 7 percent of the fully diluted outstanding shares, for its ESOPs (Employee stock ownership) pool.
MobiKwik secured $20 million in June from the Abu Dhabi Investment Authority, a sovereign wealth fund of the United Arab Emirates (UAE). The round also saw participation from Cyriac, Padma awardee Sat Pal Khattar, and Former Infosys CIO V G Dheeshjith alongside new investors which include Sequoia Capital and Bajaj Finance.
In June, MobiKwik’s shares in the unlisted market were trading at Rs 895, valuing the company at $700 million. On October 13, the unlisted shares were trading climbed at Rs 1,187.35 each. This latest round of secondary fundraise likely be part of a larger pre-IPO round as seen with other IPO-bound startups including Delhivery, PharmEasy, and PolicyBazaar.
Mobikwik’s proposed Rs 1900 crore IPO consists of the issuance of primary shares worth Rs 1500 crore and an offer of sale (OFS) worth Rs 400 crore from the company’s existing shareholders. MobiKwik is planning an IPO with a market valuation between $1.5 billion to $1.7 billion, which is believed to go public before Diwali.
MobiKwik, founded in 2009 by Bipin Preet Singh and his wife Upasana Taku, has raised more than $165 million in primary rounds so far. Singh and Taku jointly own a 35 percent ownership in the Gurgaon-based fintech startup. MobiKwik emerged as a digital wallet and now evolved into a horizontal fintech platform that provides a wide range of financial services such as credit, insurance, and gold loans.
According to the DRHP, MobiKwik’s revenue from operations declined to Rs 288.5 crore in FY21 from Rs 355.6 crore the FY20, which is slightly more than 2X the Rs 148.4 crore recorded in FY19 ending March 2019. As a result, the company’s overall income declined to Rs 302 crore from Rs 369 crore the previous year. The startup’s total loss for the year climbed to Rs 110.9 crore from Rs 99.1 crore the previous year, amounting to a more than 20 percent drop in revenue.
Considering the losses, the startup is optimistic about its future, indicating that an essential aspect of its business is the ability to minimize risk involved with buy now pay later (BNPL) operations, such as identifying appropriate users, suitable underwriting, and establishing a noticeable and efficient collection strategy.