PB Fintech Ltd, the parent of Indian online insurance platform Policybazaar, has filed the draft red herring prospectus (DRHP) with capital market regulator SEBI to launch Rs 6,017.5 crore IPO. PB Fintech Ltd, Policybazaar’s parent, will issue fresh shares worth Rs 3,750 crore and an offer for sale (OFS) of shares worth Rs 2,267.5 crore. The SoftBank Group Corp.-backed startup may consider a private placement of Rs 750 crore, according to DRHP. The OFS will see sale of up to Rs 1,875 crore worth of shares by SVF Python II (Cayman) and up to Rs 392.50 crore by others. Policybazaar is backed by marquee investors such as Softbank, Temasek, Info Edge, among others.
Kotak Mahindra Capital, Morgan Stanley, Citigroup Global Markets India, ICICI Securities, HDFC Bank Ltd, IIFL Securities and Jefferies India are the book running lead managers to the issue. Link Intime Pvt Ltd is the registrar to the issue. Policybazaar, also backed by Tiger Global Management and Tencent Holdings Ltd., has joined the leagues of other new age internet companies such as Zomato, Paytm, Mobikwik, and CarTrade, by filing the IPO papers with the capital market regulator. There are no listed companies in India that engage in a business similar to that of Policybazaar.
In FY2020, India had a Rs 7.6 trillion (US$ 102 billion) insurance industry, measured in terms of total premium. This industry is expected to grow at a 17.8 per cent CAGR to reach Rs 39 trillion (US$ 520 billion) by FY2030, with life, health and other non-life insurance growing at 18.8 per cent, 15.3 per cent and 13.5 per cent CAGR, respectively, as per Frost & Sullivan. However, as compared with global peers, India has a highly underpenetrated insurance market. The company has planned to utilise the net proceeds towards enhancing visibility and awareness of its brands, including but not limited to Policybazaar and Paisabazaar worth Rs 1,500 crore, new opportunities to expand growth initiatives to increase its consumer base including offline presence worth Rs 375 crore, funding strategic investments and acquisitions worth Rs 600 crore, expanding presence outside India worth Rs 375 crore and for general corporate purposes.
The weighted average return on net worth stands at 23.57 per cent. As on March 31, 2021, net asset value per equity shares was Rs 54.52. The company said that the recent lockdowns and restrictions in response to the second wave had severely impacted the sales of its Insurer Partners’ travel insurance products, resulting in a decrease in demand for travel insurance products sold through Policybazaar platform in Fiscals 2021 and 2020, as well as company’s ability to service consumers in person, such as organising medical check-ups.
PB Fintech operates in India’s dynamic and competitive fintech industry, where its Policybazaar platform operates in India’s online insurance product and service industry, while Paisabazaar platform operates in India’s online credit industry. These industries are relatively new, and business models continue to evolve.