MobiKwik has filed its preliminary papers with markets regulator SEBI to raise up to ₹700 crore through an initial public offering. The IPO, featuring a face value of ₹2, comprises an exclusive issuance of equity shares, without any offer for sale component.
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Prior to considering investment in the MobiKwik IPO, investors should familiarise themselves with comprehensive details about the company risk factors outlined in the DRHP. Here are 10 pivotal risk factors associated with the MobiKwik IPO:
MobiKwik IPO: 10 risk factors
1. Intense Competition in Fintech Industry: The company faces substantial competition in the fintech industry, which could materially and adversely affect its business, financial condition, and prospects.
2. Security Breaches and Data Protection: The platform is vulnerable to security breaches and attacks, and any failure to protect personal information may damage the company’s reputation and have material adverse effects on its business.
3. Risks in Alternative Investment Business: The company’s Xtra business may be exposed to credit, liquidity, and reputational risks, particularly due to its reliance on a single distribution partner.
4. Historical Losses and Profitability: Despite turning profitable in the six months ended September 30, the company has incurred losses in previous fiscal years, posing a risk to maintaining consistent profitability.
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5. Dependency on Zaakpay’s Services: The company heavily relies on Zaakpay for payment services and Financial Services business, and any disruption in its services may adversely affect the platform’s operations and brand.
6. Deficiencies in RBI Compliance: Deficiencies and irregularities in managing records and complying with RBI regulations may expose the company to regulatory actions and penalties, negatively impacting its business and reputation.
7. Reliance on Third-Party Services: The company depends on third-party services, and any disruption or interference in these services could adversely affect its business, financial condition, and results.
8. Dependency on Search Engines and Operating Systems: Relying on internet search engines, mobile operating systems, and application marketplaces for visibility poses a risk, as unfavourable placements may impact usage and brand recognition.
9. Changes in Consumer Funding Methods: Shifts in how consumers fund their MobiKwik Wallets may have negative implications for the company’s business, financial condition, and results.
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10. Fraudulent Transactions and Illegal Activities: Ineffectively dealing with fraudulent transactions and illegal activities could harm the company’s business, erode confidence, and reduce platform usage by merchants and consumers.
