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BENGALURU : For 13-year old insurance and credit provider, PB Fintech Ltd., the atmosphere is of nervousness and excitement, as the company heads for their 5,709.72 crore initial public offering (IPO) next week, being a participant in the slew of Indian startup IPOs slotted towards November.  


The company which owns insurance aggregator PolicyBazaar, credit marketplace PaisaBazaar and digital health venture DocPrime is expected to use the proceeds from the IPO towards expansion, expanding offline presence and opportunistic acquisitions. The IPO opens on November 1.  


In a detailed chat, PB Fintech’s chairman and chief executive, Yashish Dahiya and chief financial officer Alok Bansal talk about the decision on the IPO, the business and how the company decided on a domestic listing this year. 


Edited excerpts:


Why did PB Fintech look at an IPO now, when the amount of private capital available in the market? 


Dahiya:  I think it was really timely considering the scale PB Fintech has reached. We have got 12-13 institutional investors. There’s a time when a company reaches a stage of evolution where it is okay to be public. We didn’t see a reason to delay it.  


We aren’t doing an IPO to raise more capital. We have totally raised $400 million till date and still have $250 million in the bank. And we don’t see this capital running out for the next 5 years.  


We were actually arguing internally for an international listing, until this year, because we thought it would be cumbersome to list domestically. But SEBI moved at a breakneck speed and we were really happy with the process. 


Why did PB Fintech reduce the final offering size from 6017 crore to 5709 crore?   


Bansal: The reduction has been by Yashish and me. We had put a part of our stake as a part of the offer for sale (OFS), but then realised we do not have any specific need to dilute right now. So both of us (founders) have reduced and everything else remains the same. 


(Both co-founders Yashish Dahiya and Alok Bansal will be now selling 30 crore and 12.7 crore respectively as a part of the OFS.)


PB Fintech’s expenses grew for your quarter ending June, this year, on account of ESOPs and appraisals. What is the guidance in terms of operating expenses for the company? 


Bansal: It is tough to predict. Our direct costs of customer acquisition (direct cost) and customer service (operational cost). So, we are driving efficiencies in our operational cost and direct costs will not be growing at the same pace as premium or revenue growth. 


We anticipate some lumpiness in some of the quarters of the IPO, due to the regulatory costs  we incur as well as due to ESOP distribution. As a management, we are not bothered much about this inflation or lumpiness. It's directly linked to our IPO.  


With acquisitions in focus, what are the red flags you look to avoid while acquiring as a public company? 


Dahiya: We haven’t made any acquisitions in the past, until recently with Visit Health. PolicyBazaar does not like to acquire for scale. We are rather believers of build versus buy, because one can avoid future problems and achieve much higher scale.  It’s very difficult to align with the team you are acquiring. We are also building the business in Dubai and UAE in-house rather.  


However, we will acquire for competencies, team, intellectual property or the team. 


We will continue focussing on death, disease and disability protection, rest are ancillary opportunities. 


How are you looking at employee wealth creation for employees? 


Bansal: Instead of doing a small employee reservation in our IPO, we have given a lot of ESOPs, after approvals from the board. I’m not allowed to share absolute numbers. We have more than 50 people who have spent more than 10 years in the company. 


(According to the PB Fintech Ltd.’s red herring prospectus 16,080,256 options were granted to the founders and eligible employees.) 


Will you look at BNPL (Buy now pay later) offering for PaisaBazaar?


Dahiya: Not really. We do not have an interest in the BNPL market. Now, that is not to say that we will not acquire a company which may have a role in the BNPL market. 


How do you see your play in smaller cities as you create physical infrastructure? 


Dahiya: Offline will help us become a real mass player sooner. So far we were doing a mass product but selling through a niche channel online. So offline centers will help us to reach the masses faster.    


What have been your biggest learnings in building PolicyBazaar over 13 years? 


Dahiya: I think for DocPrime our strength was to pull the plug when it wasn’t working out and we burnt $3 million there. Our path of building a consumer business quickly was an incorrect path and expensive affair. And that was necessary to understand the futility of the path. 


We have the maturity of changing course. But we never thought that our course for insurance was an insurmountable challenge.  Although it was a very difficult 5-6 years building that (insurance).  


The best advice I got was to never do anything before time and I think I have a special skill of being on time. 

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