PolicyBazaar on Monday filed draft papers for an initial public offering (IPO) of up to Rs 6017.5 crore ($811.3 million) with markets regulator Securities and Exchange Board of India (SEBI). The online insurance aggregator joins a growing tribe of private equity (PE) backed technology startups making a beeline for the capital markets this year.
Late last month, foodtech unicorn Zomato (unicorns are startups valued privately at $1 billion or more) listed on the Bombay Stock Exchange. Payments companies Paytm and Mobikwik and online automobile marketplace CarTrade are also expected follow suit, having filed draft IPO papers.
The SoftBank Group Corp and Tiger Global Management backed PolicyBazaar IPO will comprise of a fresh issue of equity shares of up to Rs 3,750 crore and offer for sale (OFS) of up to Rs 2267.5 crore by the shareholders, according to the draft red herring prospectus (DRHP) filed by the insurance aggregator’s Gurugram based parent PB Fintech.
SoftBank unit SVF Python II (Cayman) Ltd is selling shares worth Rs 1,875 crore. Policybazaar founders Yashish Dahiya and Alok Bansal are offloading stakes worth Rs 250 crore and 95 crore respectively.
Other shareholders in Policybazaar include Naukri parent Info Edge, Chinese technology conglomerate Tencent Holdings, hedge funds Falcon Edge Capital and Steadview Capital, PE firm True North and venture capital firm Inventus Capital.
Policybazaar will use the net proceeds for branding (Rs 1,500 crore), strategic investments and acquisitions (Rs 600 crore), and international growth (Rs 375 crore. It also intends to invest Rs 375 crore for new opportunities to ramp up its consumer base and offline presence. The remaining capital will be used for general corporate purposes.
Founded in 2008 by Yashish Dahiya and Alok Bansal, PB Fintech was formerly called Etechaces Marketing and Consulting and operates a total of seven businesses. It runs online insurer PolicyBazaar, online marketplace for financial products Paisabazaar, call centre operator Icall Support Services, online healthcare services provider Docprime Technologies, and motor vehicle claims and related assistance services platform Accurex Marketing and Consulting.
The company had a 93.4% market share based on the number of policies sold and 65.3% of all digital insurance sales in India by volume in 2019-2020, the DRHP said citing Frost & Sullivan. In financial year 2020-21, the company originated premiums worth Rs 2742.9 crore for its insurer partners from new insurance policies and a total premium of Rs 4701.3 crore including renewals. As of March 31, 2021, over 48 million consumers were registered on its platform and purchased over 19 million policies from its insurer partners.
PolicyBazaar's consolidated revenue from operations in 2020-21 increased to Rs 886.66 crore from Rs 771.2 crore in the previous financial year. Its net loss during the year narrowed to Rs 150.24 crore from Rs 304.02 crore.
"We expect our costs to increase over time and our losses will continue given the investments expected towards growing our business," it said.
In April, PolicyBazaar said it would merge into Info Edge’s MakeSense Technologies in an all-share deal to save costs and streamline corporate structure. The company is awaiting NCLT approval for the amalgamation.
The book running lead managers to the issue are Kotak Mahindra Capital, Morgan Stanley India, Citigroup Global Markets India, HDFC Bank, ICICI Securities, IIFL Securities and Jefferies India.