26 July 2024
Two investors who’d committed to investing in MobiKwik’s public issue have pulled out, according to two people directly aware of the development. The two investors are Eastspring Investments and Nomura. This is bad news for the digital payments company and puts a spanner in its long-in-the-works IPO plans.
While it could not independently verify why the investors pulled out, one of the two people cited above said that investors aren’t hot on the company’s ability to compete and grow in the crowded fintech space. Plus, the fairly expensive valuation. 2/7
“The valuation has already dropped to $950 million post from $1.2 billion post but looks like it may go lower,” says the person cited above; both individuals asked not to be named.
“The IPO has not been called off yet. The sticking point is the last placement to ADIA, or the Abu Dhabi Investment Authority, was at $750 million. They don’t want to do a down round so it is still stuck at $800 million pre-money or $1 billion post.”
According to the report by themorningcontext, With anchor investors turning hesitant, MobiKwik’s investment bankers have their task cut out for the next few weeks—addressing investor concerns, assuring them of a robust stock price (yet to be announced) and the long-term demand from local investors. This is easier said than done because a significant chunk of domestic funds and fintech sector allocation money from foreign institutions has been soaked up by Paytm’s IPO, which leaves little or no room for MobiKwik. If the road show and investor meets do not allay fears, the listing could be postponed or worse, called off.
If the listing is delayed, the company will have to return to the drawing board and shore up its business and finances, which as things stand today are not in the best health. A far bigger cause of worry is the fallout for the fintech ecosystem.