New Delhi: MobiKwik, one of India’s leading mobile-wallet companies, is in advanced talks with about half a dozen lenders and mutual funds to raise as much as Rs 1,000 crore to finance its expansion plans that include the likely acquisition of a rival, three people familiar with the development.
“MobiKwik is in advanced discussion to raise between $100 and 150 million from the domestic private- and public-sector banks, and some of the mutual funds by end of this month or early next month,” one of the people directly involved in the fund-raising initiative told.
MobiKwik’s cash-raising initiative comes amid talk that the eight-year old, home-grown company is negotiating to buy web retailer Snapdeal’s payments-wallet business, Freecharge, in an equity-swap deal. If MobiKwik were the winner in a multi-horse race for Freecharge, the transaction is expected to be at a significant discount to the $400 million that Snapdeal had paid in 2015 for acquiring Freecharge.
Flipkart and Paytm are considered current front-runners in the bid to acquire Freecharge, with MobiKwik also in the fray. Other companies that have looked at Freecharge before, and remain dark horses in the acquisition bid include US-based PayPal and Naspers-backed PayU, according to a person involved in the negotiations.
MobiKwik was founded in 2009 by Bipin Preet Singh and Upasana Taku. BCCL, which publishes this newspaper, is one of the investors in MobiKwik.
A second person familiar with the discussions between MobiKwik and Snapdeal told ET: “The proposed transaction will be more of a merger between Freecharge and MobiKwik. The shareholding of the merged entity will depend upon the valuation of these two companies.”
A MobiKwik spokesperson declined to comment on this report, while a Snapdeal spokesperson did not respond to queries on the proposed negotiations on Freecharge.
“The fund raising from Indian financial institutions will set the benchmark valuation for MobiKwik, and will be used for negotiating with Freecharge,” he said. “Both companies are also exploring the possibility to raise funds from a leading mainland Chinese investor after the merger. Chinese investors have indicated they may invest about $200 million in the merged entity for about a 20—25% stake,” said the person quoted above.
The company has so far raised $70 million in the last three rounds of funding from Sequoia Capital, American Express, Tree Line Asia, MediaTek, GMO Payment Gateway, Cisco Investments, and Net1. In November 2016, MobiKwik launched ‘MobiKwik Lite’, a below-1mb app that works seamlessly on EDGE connections. The company has about 250 employees, 1,200 contract workers, 10,000 field staff, and about $2 billion gross merchandise value.
To tide over a bout of cash crunch, Freecharge was in discussions with global payments platform PayPal Holdings Inc to sell a minority stake. However, the discussion failed because of differences over valuations.
“The company is looking at raising the fund at a valuation of Rs 4,500 crore to Rs 5,000 crore. Mobikwik is looking at diluting between 15% and 20% stake to a group of domestic financial institutions,” a second person familiar with the deal said.
Source: Economic Times