Mobile payment service provider Money On Mobile to raise $50M from Calpian

Mumbai-based startup My Mobile Payments Ltd (MMPL), which owns and operates mobile payment platform Money on Mobile, is looking to raise $50 million from Texas-based Calpian Inc, a public company dealing in electronic payments processing, according to a Medianama report quoting its managing director.

The company is to receive the funds in two tranches over the next six months. The funds will primarily be used for adding payment options to the existing service. The report said the deal is different from a previously announced transaction related to the group.

The company has applied to the Foreign Investment Promotion Board (FIPB), the nodal body for foreign investment in the country, for getting its approval for the same, as per a SEC disclosure by Calpian. MMPL is licensed and regulated by the Reserve Bank of India (RBI).

Earlier in March 2012, Calpian had invested in a newly formed sister firm Digital Payments Processing Ltd (DPPL), which is sharing the management team who runs MMPL and derives all its business from that entity. It was Calpian's first investment in India. In a nutshell, the deal involved a mix of cash and stock transactions spread over two years for a total cash consideration of $9.7 million besides stock issue worth $20 million (either to the promoters of MMPL or to MMPL itself, but in tranches through January 2014) to acquire up to 74 per cent stake in DPPL.

This investment was structured in this format as it was not clear if Calpian would be permitted, under the then-existing regulations, to invest directly in MMPL.

As of June 30, 2013, Calpian owned 45 per cent of DPPL and had invested $7.1 million, besides issuing 3.7 million shares valued at $5.5 million. It held 65 per cent economic interest in DPPL (accounting for advances made to DPPL).

On July 24, 2013, Calpian's board ratified a grant of an executive bonus of around $34,000 to Shashank Joshi, DPPL's managing director and a member of Calpian's board, to purchase additional shares of DPPL sufficient to dilute Calpian's ownership below 50 per cent so that its consolidated earnings do not reflect numbers of DPPL and MMPL.

Money on Mobile was first launched for the B2B market in India in 2010 and last year the company received RBI's permission to offer the semi-closed m-wallet service for the consumer market nationally. It allows its users to load their mobile phones with cash of various denominations at retail touch points and then use this virtual money to top up any prepaid mobile or for DTH recharge or pay post-paid mobile bills, utility bills (like electricity and gas) and also purchase airline, bus and movie tickets.

Also, since the service operates independent of the consumer's mobile operator or bank, any mobile subscriber can avail the service through a SMS or mobile application-based platform. The company has 15 telcos and six DTH providers on board, and generates a large part of its revenues from the discounts provided by them for bulk airtime buyers.

The company already has an Android app that enables users to make payments post registering with their personal accounts and updating their banking details. Going forward, it will also launch apps for Windows and Symbian operating systems.

(Edited by Joby Puthuparampil Johnson)