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Business News/ Companies / News/  Policybazaar tries to avoid Zomato-like situation as early investors plan exit

Policybazaar tries to avoid Zomato-like situation as early investors plan exit

Many institutional investors such as Premji Invest are looking to sell shares worth at least $250 mn.

Policybazaar shares have dropped 57% since their listing in November 2021. Photo: iStockPremium
Policybazaar shares have dropped 57% since their listing in November 2021. Photo: iStock

NEW DELHI:Some of the institutional investors including Premji Invest are looking to sell shares worth at least 2,000 crore ($250 million) in listed online insurance company Policybazaar’s parent firm PB Fintech Ltd upon expiry of the one-year lock-in period since the company went public, said three people with knowledge of the development.

To ensure the stock price does not suffer, the company is helping these investors line up buyers for the expected expiry in November, said one of the persons cited above requesting anonymity.

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On 15 November, 2021, PB Fintech listed on the domestic bourses at a 17% premium with the stock opening at around 1,200 apiece. The stock has since fallen nearly 57% to 520.45 apiece at close of trading on the NSE on Thursday.

“The company wants to avoid having a Zomato kind of a situation and hence wants to line up buyers ahead of the expiry," the second person said. The end of the lock-in period increases the supply of tradeable shares.

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Food delivery company Zomato Ltd saw its stock drop 11.4% to close at a record low after the one-year lock-in period for investors who bought shares in the company’s initial public offering (IPO) ended on 23 July. Moore Strategic Ventures, Tiger Global, Sequoia Capital and Uber sold stakes in Zomato upon expiry of the lock-in. 

Even as early stage and global investors look to cash out of some of these investments post lock-in, homegrown insurers and mutual funds have turned to be big backers of such companies.

Last year, Policybazaar raised 5,625 crore through the primary route, selling shares in the range of 940-980 apiece.

The person cited above said the plan is for Avendus Capital’s wealth fund arm to either buy the shares through its alternate investment fund (AIF) or line up buyers for the same.

Premji Invest holds around 2.07% of Policybazaar through its PI Opportunities Fund II. The identity of the other investors who could sell their holdings could not be ascertained immediately.

An email query to Avendus Capital and messages to Premji Invest did not elicit any response till press time.

When contacted, a Policybazaar spokesperson said it has no knowledge of any such transaction in the offing.

Premji Invest, the family office of Wipro chairman Azim Premji, invested $40 million in Policybazaar in 2015 as part of a Series D fundraise. “Premji Invest would want to take some money off the table once the lock-in ends," said the third person cited above.

Founded by Yashish Dahiya, Alok Bansal and Avaneesh Nirjar in 2008, PB Fintech counts SoftBank, Tiger Global, InfoEdge, Falcon Edge among its investors. PB Infotech runs both Policybazaar and Paisabazaar.  

PB Infotech sharply widened its net loss in the June quarter to 204.3 crore from a net loss of 110.8 crore a year earlier. Revenue more than doubled to 505.2 crore from 237.7 crore during the period. Policybazaar said last month that its premium rose 52% to 2,430 crore in the June quarter from 1,594 crore a year ago. The company claims to have a customer base of 61.2 million and over 92% market share in the online insurance aggregation business across 40 insurance centres in 32 cities.

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Ranjani Raghavan
Ranjani heads the startup and new economy team at Mint. She covers the investment and the deals ecosystem, which takes her into the secretive world of high finance — mostly private equity and venture capital firms and the people running them. She also writes about the Indian corporate world which includes old fashioned business executives and their emerging challengers from the tech ecosystem.
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Published: 16 Sep 2022, 12:52 AM IST
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