Mobikwik drags DAM Capital to Delhi High Court over ₹40 crore IPO expense payment

The Delhi High Court has issued notice on an arbitration petition filed by digital payments platform Mobikwik against its Initial Public Offering (IPO) book-running lead manager (BRLM) DAM Capital Advisors over the alleged failure to release ₹42 crore meant for IPO-related expenses. [One Mobikwik v. Dam Capital Advisors & Ors].Justice Amit Bansal issued notice in the matter on Thursday, with the case listed for hearing on August 21..According to MobiKwik, under the standard IPO execution framework, a certain amount is earmarked for IPO expenses which is specified in the prospectus. Once the listing approvals are provided by the regulator, the BRLMs are mandatorily required to jointly direct the Public Issue Bank to release the IPO expenses to Mobikwik. Once the amount is received, the issuer is then required to make payment to various service providers such as legal advisors, auditors, printers, advertising agencies and registrars who were engaged for the purposes of the IPO. Mobikwik has alleged that DAM Capital has withheld such instructions to the Public Issue Bank for ₹42 crore which continue remain in the public issue account. Mobikwik claimed that DAM Capital is withholding the instructions on account of a dispute pegged at ₹1.5 crore . The company has contended that it has already spent ₹13 crore from its own funds to meet IPO-related obligations and sought urgent court orders to ensure the release of the amounts from the public issue account so that the vendors whose payments are due can be paid. DAM Capital has maintained that the disputed sum could be significantly higher than what Mobikwik has stated..In January 2024, Mobikwik filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) for an initial public offering comprising a fresh issue of shares worth ₹700 crore and an offer for sale (OFS) of up to 5.2 million equity shares by existing shareholders, including founders and early investors. The proceeds from the fresh issue were proposed to be used for funding growth in its BNPL business, investing in data and technology and for general corporate purposes.DAM Capital was one of the lead BRLMs appointed alongside SBI Capital Markets with responsibilities that included vendor coordination, marketing, investor roadshows and compliance management..Mobikwik was represented by Senior Advocate Rajshekhar Rao with a team from Claritas Legal comprising Advocates Sumit Roy, Sidharth Mahajan, Utkarsh Mishra and Zahid..Dam Capital was represented by a team from Trilegal.