Bajaj Finance Buys 11% Stake in MobiKwik for Rs. 225 Crore – New Fund to Grow Merchant Network

In a BSE filing, Bajaj Finance has picked up around 11% of stake in Digital Payments company Mobikwik for about Rs 225 crores. With this, Bajaj Finance has entered into a subscription agreement with the Gurgaon based One MobiKwik Systems.

New Investors

MobiKwik has divested around 11% of their stake to the Non Banking Finance based company Bajaj Finance. This subscription will raise around Rs. 225 crore with an estimated valuation of around Rs. 2,000 crore. Not only this, the Gurgaon based firm has also raised around $80 million from several investors. They includes stalwarts like Sequoia, American Express, MediaTek and others.

Bajaj Stake in MobiKwik

The stock filing was announced by Bajaj Finance during the exchange filing later on Wednesday. They have mentioned, they have entered into a “Subscription Agreement with One MobiKwik Systems Private Limited (Mobikwik) for an acquisition of 10 Equity Shares and 271,050 compulsory convertible Preference Shares.”

India’s Second Largest Digital Payments Platform

MobiKwik was launched back in 2009 and has a base of 55 million users with 1.5 million registered merchants. It is India’s second largest Digital Payments platform, trailing behind market leader Paytm (who has a whooping base of 225 million users). MobiKwik also claimed to have a 250 percent growth on total number of transactions on a year to year basis.

The Demonetization Effect

In the last few months, post-demonetization, all digital payments platforms has seen a massive growth, both in terms of number of users and transactions. MobiKwik too doubled its user base from 25 million to 55 million. All within a few months after November 8. Even the merchant base skyrocketed from 2.5 lakh to a whooping 15 lakh during the same period. Back in June, after a sweet period, reports suggested that in the rounds of the upcoming funding sessions would soar MobiKwik’s valuation to $1 billion. It would make it the second company from the country to do so in the Fintech space.

Focus on Payments Business only

MobiKwik has always focused on their payments business, rather than expanding to other verticals unlike market leader Paytm (who is already into e-commerce, ticketing and many). The company can utilize the stake fund to grow their merchant base, and will help them to expand their offices around the country.

Profit

Like other digital payments services in the country, demonetization did play a big role in their recent success. Apart from the crazy growth, the business numbers have grown outrageously at the same time. Be it in terms of numbers or net profitable revenue, MobiKwik has done an incredible job in these last few months.

Next Goal

MobiKwik is now targeting a 100 million user base and a 10 million merchant base by the end of next year. It might be following the footsteps of Paytm, who itself has five million merchant base on its platform. So it appears that MobiKwik seems to be placing its bets in all the right places.

New Plans (Payments Bank?)

The Gurgaon based Fintech company is planning to expand into financial services, which will include selling insurance to small and medium enterprises and disburse personal loans to consumers. Similar to its counterparts, eventually MobiKwik might graduate to being a payments bank, but they haven’t hinted at any such idea as of yet.