The Delhi High Court has issued a notice in a dispute between digital payments company Mobikwik and investment bank DAM Capital Advisors concerning unreleased IPO funds worth ₹42 crore. Justice Amit Bansal directed DAM Capital to respond, with the matter scheduled for hearing on August 21.
The Dispute Over IPO Costs
When a company prepares to go public, it sets aside a portion of IPO proceeds to cover related expenses, including fees for lawyers, auditors, registrars, advertisers, and compliance costs. These allocations are clearly stated in the IPO prospectus. Once the regulator, the Securities and Exchange Board of India (SEBI), clears the issue, lead managers are required to instruct the Public Issue Bank to release the allocated funds.
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Mobikwik claims that DAM Capital, one of its book running lead managers (BRLMs), has not issued instructions for the release of ₹42 crore despite the company already using ₹13 crore of its own money to meet IPO obligations. The company alleges that DAM Capital is withholding approval due to a dispute over ₹1.5 crore. Mobikwik has asked the court to intervene so that vendors can be paid on time.
DAM Capital, however, maintains that the disputed amount could be higher than what Mobikwik has acknowledged, which has stalled the release process.
IPO Background and Regulatory Framework
Mobikwik filed its draft red herring prospectus with SEBI in December 2024, seeking to raise ₹700 crore through a fresh issue, alongside an offer for sale of 5.2 million shares by existing shareholders. The proceeds from the fresh issue were earmarked for expanding its buy-now-pay-later (BNPL) business, strengthening technology infrastructure, and meeting general corporate requirements.
DAM Capital, along with SBI Capital Markets and ICICI Securities, acted as BRLMs, tasked with coordinating IPO marketing, investor outreach, regulatory compliance, and vendor payments. Their role is governed by SEBI’s Issue of Capital and Disclosure Requirements (ICDR) Regulations, 2018, and the Merchant Bankers Regulations, 1992.
Mainboard IPOs typically involve higher costs than SME IPOs, with merchant banking fees ranging between ₹3 crore and ₹5 crore, SEBI fees of up to ₹2.5 crore, and annual listing charges tied to market capitalization. These costs highlight the significance of the disputed ₹42 crore in ensuring the timely execution of obligations.
The case will now test how disputes between issuers and BRLMs are handled in India’s regulatory and judicial framework.