MobiKwik Takes Second Bite at IPO: Issue Size Reduced by 63% in Post-Market Downturn

One MobiKwik Systems, parent company of the digital payments platform MobiKwik, has refiled its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI), marking its second attempt at an initial public offering (IPO) amidst a challenging market environment. This time, however, the company has significantly scaled down its ambitions, slashing the issue size from a previously planned Rs. 1,900 crore to Rs. 700 crore, representing a reduction of over 63%.

Scaling Back in a Turbulent Market:

MobiKwik's initial attempt at an IPO in July 2021 was shelved due to weak market conditions. The ongoing global economic turmoil and subsequent investor cautiousness have likely influenced the reduced size of the current offering. By lowering the issue size, MobiKwik aims to increase the probability of a successful IPO by making it more appealing to investors in a risk-averse environment.

Focus on Fresh Issuance:

The fresh DRHP reveals that the entire Rs. 700 crore will be a fresh issue of shares, indicating no offer for sale (OFS) component from existing shareholders. This suggests that MobiKwik, rather than existing investors, would benefit directly from the proceeds raised through the IPO. The funds are intended to fuel the company's growth in financial services and payment services, as well as investments in data and technology tools like artificial intelligence and machine learning.

MobiKwik's Journey and Market Position:

Founded in 2009, MobiKwik boasts a registered user base of over 146.94 million as of September 30, 2023, and supports 3.81 million merchants for online/offline payments. It faces stiff competition from larger rivals like Paytm and PhonePe, both already listed on the Indian stock exchanges. Additionally, the broader fintech landscape has witnessed a slowdown in recent months, raising concerns about the industry's growth prospects.

Challenges and Prospects:

MobiKwik's refilled IPO attempt comes amidst a mix of challenges and opportunities. While the reduced issue size may attract cautious investors, the company still needs to convince them of its growth potential and profitability in a competitive market. MobiKwik's focus on financial services, particularly lending, could offer a differentiating factor. However, navigating regulatory landscape and managing credit risk remain crucial considerations.

The Road Ahead:

Whether MobiKwik's second attempt at an IPO will prove successful remains to be seen. Market conditions, investor sentiment, and the company's ability to articulate its growth strategy will be key determinants. Regardless of the immediate outcome, MobiKwik's revised IPO plan reflects a cautious approach in a turbulent market, and its success or failure could offer valuable insights into the broader trajectory of India's fintech sector.