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Why is MobMe raising only close to $4.5 million in its IPO?

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MobMe, a Kerala based mobile VAS company founded in 2006 has filed its DRHP in the NSE SME stock exchange to raise a capital of close to $4.5 million through Initial Public Offering (IPO), reports TechCircle. The company will offer 705,600 equity shares for the face value of Rs.10.

This follows the company’s plans to raise capital through an Initial Public Offering (IPO) rather than opting for venture capital funding in December 2012.

Speaking to Medianama, Sanjay Vijayakumar, CEO of MobMe said that the capital raised will be used to implement pilot projects of digital signature in Kerala and this pilot project is expected to take 12 months to roll out and implement. MobMe expects a significant revenue growth if the pilot is a success and hopes to raise more funds. It also plans to shift from NSE SME exchange to the main stock exchange in a year or two.

MobME’s revenue:

MobME’s unconsolidated total income was Rs 23.10 crores for the financial year that ended on March 31, 2012 and has grown at a CAGR of 185.75% over its total income of Rs 3.46 crores for the period ending March 31, 2008. MobME’s unconsolidated net profit was Rs 5.60 crore for the financial year ended March 31, 2012 as compared to Rs 1.06 crore for the period ending March 31, 2008.

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MobME’s reasons for investing in Digital Signature in Phones:

A few months ago, probably foreseeing the IPO, MobMe had inked a deal with Finland based Valimo, a mobile authentication and digital signature provider and digital security company Gemalto* to launch a mobile digital signature solution called Mobile Express. It is likely that this project is going to be expanded into the pilot project for different state and national players.

Vijaykumar said that currently the digital signatures come as USBs which can be easily lost. So MobME intends to add the digital signature to the SIM card and use it in any mobile phone. MobMe points to RBI’s declaration of the system of name & password as unsafe as one of the key indicators for the growth of digital signature. With the introduction of e-tendering, there is a need for digital authentication of identities. MobMe seems to be banking on this fact to a great extent especially in their home state of Kerala where MobME has a strong hold on the m-governance projects being implemented by the Kerala government.

Apart from e-tendering and m-governance, MobMe is also expecting digital signatures to benefit other industries like banking, insurance etc. Although, the names are undisclosed at the moment, MobMe already has banks in the list of clients who have signed up for their pilot project.

Is the shift to m-governance initiatives, a move to battle falling VAS?

With the VAS industry going towards a low in the recent times, MobMe could possibly be pivoting more towards m-governance to avoid the state of flux that other VAS providers are in. Currently MobMe provides m-governance services to the state governments of Kerala, Goa and Nagaland. Their work has extended to over 90 departments in the state of Kerala alone apart from other departments in Goa and Nagaland. They provide push SMS, pull SMS (all three states) and IVR based message service (only Kerala and Goa).

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Sanjay Vijayakumar’s open admission to seeing more opportunities in m-governance and enterprise vertical confirm any doubt about the matter. Besides, m-governance services provided to state government currently accounts for less than 10% of MobMe’s revenues at the moment. However, Sanjay Vijayakumar said that this low percentage was owing to the lower allocation of funds towards m-governance during 2004-05 for the next five year plan period in Kerala affecting MobMe which started in 2006. With the sizeable increase in the fund allocated for m-governance in Kerala, MobME could be eyeing for a larger piece of the m-governance pie. MobME will continue to have present VAS operations and employ new staff to handle the digital signature pilot project.


The other mobile VAS companies who have gone public so far include OnMobile Global and Tanla. One97 had filed a draft red herring prospectus with the Securities and Exchange Board of India, looking to raise Rs. 1200 million (Rs. 120 crores) from its proposed Initial Public Offering (IPO) in March 2010. However, the company deferred its IPO plans in December 2010 citing market volatility and finally dropped its IPO plans in August 2011.

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