Bajaj Finance To Invest $35.2 Mn In Digital Payments Company MobiKwik For 11% Stake

Gurugram-based digital payments company MobiKwik will be raising $35.2 Mn (INR 225 Cr) from Bajaj Finance Ltd (BFL) by selling 11% stake. As per the latest BSE filing by Bajaj Finance, it stated that it has entered into a subscription agreement with One MobiKwik Systems.

Announcing the association, Bipin Preet Singh, CEO, Mobikwik stated “Our partnership with BFL will enable us to realise our vision of performing all the functions of bank yet retain our core competency of being India’s leading e-wallet and we strongly believe that this combined value proposition will attract millions of new customers to choose wallet led mobile banking transactions. In short, Mobikwik transforms itself as a new-age bank where our digital transactions will lead to lowering of lending rates and increased supply of money in the Indian economy.”

Under the agreement, Bajaj Finance will acquire 10 equity shares and 271,050 compulsory convertible preference shares (CCPS) of Mobikwik, acquiring almost 10.83% stake in the digital payments company.

Bajaj Finance stated that the conclusion of the transaction is subject to fulfilment of certain conditions in due course. It also added that the “investment is intended to support existing line of businesses and to be used to develop front end application for users availing financial services from Bajaj Finance Ltd. Also to enable customers of our company to have a one stop solution for all debit and credit spends.”

Rajeev Jain, Managing Director, Bajaj Finance Limited stated, “We aim to combine the synergies of both the organisations – deep-rooted customer analytics and extreme focus on a digital-oriented ecosystem will make this a disruptive proposition amongst our existing products. Bringing in debit and credit option in one app will facilitate stronger customer convenience, stimulating higher spends.”

As per a statement from MobiKwik, the strategic tie-up with one of the largest non-banks in India will enable it to launch India’s first debit and credit wallet. Through this association, Bajaj Finance Ltd will extend credit facilities via MobiKwik’s mobile app catering to the wide customer base of both the companies. The partnership will empower the consumer to avail credit facility through the wallet enabling them with instant purchases and payment option.

Digital Payments Player Mobikwik Raising Money To Enter The Unicorn Club?

The round of funding comes shortly after MobiKwik co-founder Upasana Taku stated in June this year that the digital payments company is in talks to raise a fresh round of $100 Mn-$150 Mn. This new round is expected to take its valuation to $1 Bn, making it a Unicorn.

At the time, Upasana had declined to disclose the details of the investors but said that there was at least one major strategic investor and a number of financial institutions that they were currently in talks with. MobiKwik expected to close that round in the next few months.

Started in 2009, by Bipin Preet Singh and Upasana Taku, the mobile wallet claims to have over 55 Mn users and 1.5 Mn retailers on its platform.

The company has raised a total of $151.9 Mn in 6 rounds of funding, to date. It had raised $25 Mn in Series B funding from Tree Line Asia in 2015. Japanese and Taiwanese investors also backed the company for an undisclosed amount in May 2016. This was followed by a strategic partnership agreement between MobiKwik and South Africa’s Net1UEPS and a $40 Mn investment by Net1UEPS.

MCA documents filed by the company also indicated that there have been two more investments between January and March 2017. In January 2017, Cisco Systems invested $650K (INR 4.2 Cr), while Bennett, Coleman & Coleman Ltd invested $351 (INR 22.7K) in March 2017.

Earlier this year, Mobikwik was also rumoured to be in the race to acquire rival FreeCharge, which was finally sold to Axis Bank last week for $60 Mn. Meanwhile, rival Paytm is now in the process of integrating a WhatsApp-like in-app chat service on its native app.

The investment by Bajaj Finance will give more arsenal to MobiKwik to compete with its larger rival Paytm that is backed by deep- pocketed investors like Alibaba and SoftBank. More so, the digital payments company will also get a chance to lend money and provide insurance for users availing financial services from Bajaj Finance Ltd.