MobiKwik acquires 3.39% stake in Blostem Fintech after listing

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Fintech firm MobiKwik has acquired a 3.39% stake in Blostem Fintech, a business-to-business (B2B) banking infrastructure platform, for ₹1.49 crore. This acquisition is part of an investment plan where MobiKwik committed ₹3 crore in two tranches to increase its stake in Blostem. With this latest transaction, MobiKwik’s total holding in Blostem is set to increase to 6.79%.

Founded in 2021, Blostem Fintech specializes in Fixed Deposit (FD) aggregation, partnering with banks and Non-Banking Financial Companies (NBFCs). The company recorded revenue of ₹30.76 lakh for the fiscal year ending March 2024. The deal does not require government or regulatory approval and has been structured as a cash consideration.

MobiKwik, a listed fintech firm, aims to expand its digital financial services portfolio through strategic acquisitions. The investment is expected to enhance MobiKwik’s presence in banking infrastructure solutions and leverage Blostem’s API-based financial technology.

1. Blostem Fintech: Business Model, Revenue, and Services

1.1 Business Model

Blostem Fintech operates as a B2B banking infrastructure platform, focusing on enabling businesses to integrate financial services. The company specializes in Fixed Deposit (FD) aggregation, allowing users to access a diverse range of FD products from various banks and NBFCs.

1.2 Revenue Model

Blostem earns revenue through:

• Commission-based model: Partnering banks and NBFCs pay fees for FD aggregation and financial product distribution.
• Subscription fees: Businesses using Blostem’s API-based financial solutions pay for seamless integrations.
• Technology services: Custom fintech solutions for financial institutions.

1.3 Funding Background

Blostem has attracted early-stage investments from fintech-focused venture capital firms and angel investors. The company remains privately held and focuses on expanding its banking partnerships.

1.4 Founders and Their Background

Blostem was founded in 2021 by Sandeep Garg, Pankaj Singh, and Uday Sharma. The founding team has experience in banking, technology, and digital payments, positioning Blostem as a leader in API-based financial integrations.

1.5 Services and Products

Blostem offers the following:

• FD Aggregation Platform: Simplifies FD investments across multiple banks.
• API-Based Banking Solutions: Enables businesses to offer embedded financial products.
• Financial Product Distribution: Connects financial institutions with digital platforms for better outreach.

2. MobiKwik’s Investment in Blostem Fintech

2.1 Investment Details

MobiKwik has signed a share subscription and shareholders’ agreement to invest ₹3 crore in two phases:

• First tranche: ₹1.5 crore in March 2024 for a 3.4% stake.
• Second tranche: ₹1.49 crore to raise total shareholding to 6.79%.

2.2 Purpose of Investment

MobiKwik aims to:

• Expand its fintech ecosystem by integrating Blostem’s banking solutions.
• Enhance its FD offering launched in October 2023.
• Strengthen partnerships with banks and NBFCs to offer diverse financial services.

2.3 Regulatory and Market Impact

• No government or regulatory approvals are required for this investment.
• MobiKwik will leverage Blostem’s plug-and-play technology to enhance its service portfolio.

3. Background of MobiKwik’s Fintech Expansion

3.1 Growth and Market Position

MobiKwik, founded in 2009 by Upasana Taku and Bipin Preet Singh, has evolved into one of India’s leading digital payments and financial services platforms. The company currently serves 172 million users and 5 million merchants.

3.2 Financial Performance

• Revenue in Q3 FY25: ₹269 crore, up 17.7% YoY.
• Net Loss in Q3 FY25: ₹55.2 crore due to rising expenses.
• Payment GMV: Doubled YoY to ₹29,400 crore.

3.3 Previous Investments in Fintech

MobiKwik has focused on acquiring or investing in fintech platforms to expand its product offerings, particularly in digital lending, FD aggregation, and wealth management.

4. Industry Insights and Competitive Landscape

4.1 Indian Fintech Growth

India’s fintech market is expected to reach $150 billion by 2025, with digital lending and wealth management seeing rapid adoption. Companies like PhonePe, Paytm, and Razorpay are also expanding into similar financial services.

4.2 Challenges for Fintech Players

• Regulatory changes: RBI’s evolving policies impact digital lending and banking partnerships.
• Profitability pressure: High marketing and operational costs.
• Competition from banks: Traditional banks are strengthening their digital presence.

5. Learning for Startups and Entrepreneurs

5.1 Key Takeaways

1. Strategic Investments Matter: Investing in complementary fintech businesses can enhance product offerings and market reach.
2. Regulatory Preparedness: Startups must stay updated with RBI guidelines for financial services.
3. Tech-Driven Growth: API-based fintech solutions are crucial for scaling operations efficiently.
4. Diversification is Key: Expanding into multiple financial services mitigates risks and enhances revenue streams.

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