Policybazaar files DRHP with Sebi for Rs 6,000-crore IPO

Mumbai: PB Fintech, parent entity of online marketplaces Policybazaar and Paisabazaar, has filed its draft red herring prospectus (DRHP) with markets regulator Sebi to raise Rs 6,017 crore ($809 million) through an initial public offering (IPO).

The Gurgaon-based firm is now the fifth startup after Zomato, Paytm, Mobikwik and CarTrade to initiate proceedings to debut on Indian bourses this year.

In the prospectus, PB Fintech said it would raise Rs 3,750 crore ($504 million) in a fresh issue and the remaining Rs 2,267 crore ($305 million) through an offer for sale (OFS), where existing investors can sell their stakes directly through the exchanges.


SoftBank Vision Fund Python, which has 9.75% stake, is expected to cash in around Rs 1,875 crore ($250 million) worth of shares through the OFS.

Policybazaar’s founders — including chief executive Yashish Dahiya — are expected to together sell shares worth Rs 392.50 crore ($52 million). China’s Tencent, which owns over 9% in PB Fintech, has not been listed as an investor seeking to offload stake during the OFS.

In addition to Japan’s SoftBank, which owns about 15.76% in the fintech company through two separate funds, key investors include Info Edge with about 14.56%, Claymore Investment, which owns 6.26%, investment firm Tiger Global, Falcon Edge and Alpha Wave.

PB Fintech has been listed as an entity that is “foreign-owned and controlled.” Dahiya, along with Alok Bansal and Avaneesh Nirjar, founded Policybazaar in June 2008.

ET earlier reported that the 13-year-old startup could seek a valuation of $5-6 billion for the public offer. Sources in the know said the company is aiming to launch the offer by December.

Also Read: Why legacy insurance brands are logging off from online marketplaces

Private Placement
The online insurance retailer has also told the Securities and Exchange Board of India (Sebi) that it is consulting with book running lead managers to raise Rs 750 crore ($100 million) through a private placement of equity shares ahead of the IPO.

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.

In a bid to ease the compliance process, PB Fintech is looking to list as a professionally managed company that does not have an identifiable promoter. Dahiya has been listed as chairman and executive director, and currently has a 4.27% stake in the company.

Earlier this month, fintech major Paytm also adopted a similar strategy while filing its draft prospectus for an IPO to raise Rs 16,600 crore in November.

Indian startups’ appetite for public listings has only sharpened since Zomato raised Rs 9,375 crore in an IPO earlier this month. Fintech company Mobikwik has also filed for a Rs 1,900 crore IPO later this year.

Offline Push
PB Fintech, which narrowed its losses in FY21 to Rs 150 crore — compared to the losses of Rs 304 crore in the previous year and Rs 346 crore in FY19 — is now looking to build an offline network of 15 stores, with plans to expand to 100 locations.

The brick-and-mortar stores will serve as experience centres for customers, the company has said. It also announced a new group health insurance programme for small and medium enterprises (SMEs), micro, small and medium enterprises (MSMEs) and large corporations earlier in July.

Policybazaar, which acquired an insurance broking licence from the Insurance Regulatory and Development Authority of India in June, aims to set up a physical network while also expanding product and service offerings significantly, including claims assistance and a point-of-sale network.

According to its draft filing, the company plans to utilise the fresh issue proceeds “for enhancing visibility and awareness of brands,” as well as new opportunities to expand consumer base. Policybazaar and affiliates would also likely look at other strategic investments and acquisitions to expand presence outside India, the firm said in its draft prospectus.

Policybazaar is one of India’s largest insurance marketplaces. Group subsidiaries include Paisabazaar.com, b2b venture and ZPhin.com. The firm also has lending and insurance marketplace businesses in the United Arab Emirates.

As of March, Policybazaar has 4.8 crore registered users, with total purchases exceeding 1.9 crore policies from insurer partners. It also claims to have a 93% market share of India’s online insurance aggregation business. The company said that over 65% of the policies sold online were through its platform.