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MobiKwik to delay IPO; turns to private market

By Deepsekhar Choudhury
March 09, 2022 14:00 IST
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This comes as market has become bearish as a result of Russia-Ukraine war.

With the stock market turning choppy, fintech start-up MobiKwik, which had filed a draft red herring prospectus (DRHP) to raise around $250 million through an initial public offering (IPO), is now looking to raise money from the private market.

“We will raise private money but we are not in dire need.

"The business was profitable for the first time in the December quarter on a top line of around Rs 150 crore and that will be maintained in the March quarter also. We are generating cash,” said Upasana Taku, co-founder of MobiKwik.

 

The company said its revenues grew 86 per cent year-on-year (YoY) for the nine months ending December to Rs 397 crore – whereas consolidated gross merchandise value increased 152 per cent to Rs 25,780 crore.

The growth came on the back of a surge in usage of its BNPL (buy now pay later) service as disbursals grew 840 per cent to Rs 1,858 crore during the period.

At present, the BNPL segment contributes around 20 per cent to the company’s revenue stream – and the share is expected to rise over the next few quarters.

“MobiKwik’s first-mover advantage, a strong user funnel of around 25 million pre-approved BNPL users leveraging its consumer payments platform coupled with a 3.5 million strong merchant ecosystem has led to ever increasing user adoption and engagement with monthly spends of  Rs 3,245 and 81 per cent repeat rate,” said the company.

According to Taku, MobiKwik’s unit economics have improved a lot in the past couple of years and as a result the company has had to invest about $50 million to grow its revenue by 2.5 times since FY19. In FY22, the company expects that it will record Rs 550-600 crore in revenue – around a 100 per cent growth over the previous fiscal.

“Even if any of our competitors raise a billion dollars of funding today, they will not have a user base of 25 million eligible BNPL users any time soon. Some of the new companies have two million or three million users,” said Taku.

She added that loan defaults in the BNPL segment have already gone back to pre-Covid levels for MobiKwik.

“This strategy of focusing on sustainable growth has helped the company invest aggressively at the right places i.e., on people and technology without incurring high cash burn and sacrificing growth,” the company said.

According to its DRHP, the fintech company posted losses of Rs 111.3 crore in FY21, Rs 99 crore in FY20, and Rs 147.9 crore in FY19.

Earlier, the fintech company had pushed back its plan of a public listing last November to a later date after Paytm’s disappointing debut on the bourses.

It had received Sebi clearance for its listing on October 7.

“I think that it is common sense that if the markets are acting erratically then why do you want to risk the outcome of something for which you worked so hard?

"We have been working very hard for the last 12 years to get to this stage.

"I cannot think of any internet company which has reached over 10 crore users, having spent only Rs 700 crore.

"We have reached this stage after hard work so the IPO should be a bumper. We will fight for this only,” Taku had said earlier.

In the last round of funding, MobiKwik had raised about $20 million from Abu Dhabi Investment Authority (ADIA) last June, commanding a valuation of about $750 million.

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Deepsekhar Choudhury in Bengaluru
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