Mainly a wallet company, the company is looking to cash in on the boom in internet-based firms’ valuations in the stock market.
The company is likely to be successful as it doubled the valuation from February 2020 when it raised $20 million from Abu Dhabi Investment Authority (ADIA) last month.
However, it is tapping the market when it is not making profits, and when wallets face a bleak future from the unified payment interface, where global players like Google Pay and Wal-Mart‘s PhonePe have made a mark.
Its gross merchandise value (GMV) fell 30% last fiscal year and its net loss widened while its new user addition fell in FY21 over FY20.
However, MobiKwik has forayed into credit, also called buy-now-pay-later (BNPL) segment, which may be a promising one.
The company has listed risks its face in the draft document filed with the market regulator.
Mobikwik said it has a history of losses, including in fiscals 2019, 2020 and 2021.
“In the event our loss continues to increase, especially if we continue to grow at an accelerated rate, we may be unable to achieve profitability for the foreseeable future and it may adversely affect our business and financial condition,” it added.
It said the continuing impact of the Covid pandemic, or any future pandemic or widespread public health emergency could materially and adversely impact its business.
It highlighted the risk of not being able to add new users or merchants and retain and grow its relationships with existing users or merchants.
The company faced substantial and intense competition in the fintech industry. Highlighting the credit risk from BNPL business, it said security breaches and attacks against the platform could damage its reputation.
The company noted that it has issued equity shares during the preceding 12 months at a price that may be below the offer price.
The inability to raise foreign capital due to changes in domestic laws was also among the key risks mentioned by the company.
The IPO comprises fresh issuance of equity shares worth Rs 1,500 crore and an offer for sale of up to Rs 400 crore by promoters and existing shareholders, according to the Draft Red Herring Prospectus.
Those offering shares through the offer are American Express Travel Related Services Company Inc, Bajaj Finance, Cisco Systems (USA) Pte Ltd, Sequoia Capital India Investment Holdings III, Sequoia Capital India Investments IV, Tree Line Asia Master Fund (Singapore) Pte Ltd, as well as the company’s promoters — Upasana Rupkrishan Taku and Bipin Preet Singh.
The company may also consider a pre-IPO placement of such number of equity shares for cash consideration aggregating up to Rs 400 crore at its discretion, as per the DRHP.
If the pre-IPO placement is completed, the number of equity shares issued following such a placement will be reduced from the fresh issue.
Proceeds from the fresh issue will be used towards funding organic as well as inorganic growth initiatives and general corporate purpose.