On Thursday, One MobiKwik Systems Private Ltd, which owns MobiKwik wallet, announced that it had raised Rs 225 crore from NBFC Bajaj Finance Ltd, for 10.83 percent equity in the company.
The exchange filings from Bajaj Finance Ltd said that under the subscription agreement with One MobiKwik Systems Pvt Ltd it will acquire 10 equity shares and 271,050 compulsory convertible preference shares (CCPS).
“Post conversion of CCPS, the company would hold 10.83 percent of equity in MobiKwik on a fully diluted basis. The value of the transaction envisaged is approximately Rs 225 crore and the conclusion of the transaction is subject to fulfilment of certain conditions in due course,” stated the filings.
Further, this association with MobiKwik also marks the payment company’s entrance into the credit lending space. Claiming to be a credit and debit wallet, this partnership will allow Bajaj Finance Ltd to extend credit facilities through Mobikwik’s mobile app.
The partnership will empower consumers to avail credit facility through the wallet, enabling them with an instant purchase and payment option.
“So it will be credit that consumers can use for purchase via MobiKwik. This will work like Bajaj Finserv’s EMI product,” stated the company to YourStory. However, more details of the product will be mentioned once it is launched.
Credit EMI products finances users to purchase products and pay EMI (instalments with interests) in convenient instalments over a period of time.
In previous interactions, MobiKwik Co-founder Upasana Taku has expressed interest to not just enter credit but also provide other financial products, like insurances on the platform, putting impetus to the cross-selling business concept, which mobile wallets have been expected to evolve into.
It is actively looking to enter into segments of insurances and cashless mediclaim by partnering with banks and non-banking financial institutions.
Hence, this capital will also be partially used for giving out this credit.
Commenting on the partnership, Rajeev Jain, Managing Director, Bajaj Finance Limited said,
“We aim to combine the synergies of both the organisations - deep-rooted customer analytics and extreme focus on 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.”
On the other hand, Bipin Preet Singh, CEO, Mobikwik, said,
“Our partnership with BFL will enable us to realise our vision of performing all the functions of the bank yet retain our core competency of being an e-wallet. 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.”
According to a press statement, MobiKwik at present works with more than 15 lakh direct merchants and has close to 55 million plus users on the platform. The company has raised three rounds of funding from Sequoia Capital, American Express, Tree Line Asia, MediaTek, GMO Payment Gateway, Cisco Investments and Net1.
Over the past few months, it was reported that MobiKwik was in advanced talks with US-based investment management firm BlackRock Inc. to raise more than $100 million in investments. While some sources claim the amount to be close to $150 million, this new fund raise will value the company at an impressive $1 billion.
On the same theme of cross-selling, MobiKwik’s arch rival Paytm has launched Paytm Gold, their wealth management products, which last month allowed customers to get their cash back into their Paytm Gold account.