Policybazaar is backed by marquee investors such as Softbank, Temasek, Info Edge, among others. It is seeking a valuation of $5.5-6 billion
The parent of online financial service providers Policybazaar and Paisabazaar on Monday filed draft share sale documents with the Securities and Exchange Board of India (Sebi) for a ₹6,017.5 crore initial public offering.
The IPO consists of a fresh issue of shares worth ₹3,750 crore and an offer for sale (OFS) of ₹2,267.50 crore by its existing shareholders and promoters, parent PB Fintech Ltd said.
The OFS includes a share sale of up to ₹1,875 crore by SoftBank, along with a sale of shares worth ₹250 crore and ₹95 crore by Policybazaar co-founders Yashish Dahiya and Alok Bansal.
Founders United Trust, an investment venture previously backed by industry stalwarts such as Sequoia India’s Rajan Anandan, MakeMyTrip’s Deep Kalra and ChrysCapital’s Ashish Dhawan, will also be selling a stake worth ₹27.5 crore.
As of Monday, SoftBank owned 9.45%, Yashish Dahiya 4.27% and Alok Bansal 1.45% of PB Fintech Ltd.
In its share sale documents, PB Fintech said it is in consultation with its investment bankers to consider a private placement of equity shares of around ₹750 crore.
Kotak Mahindra Capital, Morgan Stanley, Citigroup Global Markets India, ICICI Securities, HDFC Bank Ltd, IIFL Securities and Jefferies India are managing the share sale.
Policybazaar will be allocating ₹1,500 crore from the issue to enhance visibility and awareness of its brands. An additional ₹375 crore and ₹600 crore from the issue proceeds will be used for expansion, including setting up an offline presence and for funding strategic acquisitions. Policybazaar will also be using ₹375 crore from the issue for expanding its presence outside India.
The company stated that it received its direct insurance broking licence from the Insurance and Regulatory and Development Authority in June. Previously, Policybazaar operated as a web aggregator for insurance products.
“The broking licence will allow us to go beyond our online presence and offer services such as offline claim assistance and to establish a point of sale presence network across the country. We will also need to adapt and expand our infrastructure, technology and related capabilities to cater to our prospective offline consumers. This will also require significant investment towards the technology underlying the delivery of services in order to align with consumer preferences," the company said.
PolicyBazaar will develop up to 200 physical retail outlets and expects to spend up to ₹150 crore for setting up its offline presence by the end of FY24, it said.
Meanwhile, FSN E-Commerce Ventures Ltd, which operates India’s top e-commerce firms for beauty, Nykaa, is seeking to raise as much as ₹525 crore by selling new shares in an IPO, according to a copy of its draft red herring prospectus.
Shareholders of Nykaa, , will sell as many as 43.1 million shares in the IPO.
Kotak Mahindra and Morgan Stanley are global co-coordinators and book-running lead managers for the IPO; other bookrunners are BofA Securities, Citigroup, ICICI Securities and JM Financial.
The filing of the share sale documents by both firms comes days after foodtech major Zomato created history by becoming one of the first consumer tech startups to successfully list on the Indian exchanges. Zomato’s IPO was subscribed about 40 times.
“Zomato IPO has broken the myth around loss-making startups being unable to list in the public markets. As long as the bull phase continues in the IPO market, startups will be enjoying the interest of retail investors. Further, IPOs of digital consumer businesses like Zomato and Paytm will deepen the equity market and bring a diverse set of ‘new to equity’ customers from Tier 2 and 3 markets or of a younger demographic," said Ajay Garg, managing director of Equirus Capital, an investment bank.
“Now, with Indian markets seeing large IPOs like LIC coming, it will change the weight of the Indian capital markets," added Garg.
Over the next six months, several other startups including MobiKwik, CarTrade, Paytm and ixigo, are set to list on the Indian exchange.
“The Zomato IPO showed us that retail investors for now are assessing startup IPOs based on their presence and growth opportunities as well as trajectory. However, retail investors will keep an eye on how fast these companies can show positive fundamentals and profitability. Hence, startups listing on money markets can’t be burning money anymore and need to rebalance themselves," said Abhay Vohra, partner at Burgeon law, a boutique law firm.
Policybazaar claims it originated insurance premiums worth ₹27,429 million for its 51 insurer partners from new insurance policies in FY21. Credit marketplace Paisabazaar enabled disbursals of ₹2,917 crore in FY21 as compared with ₹6,549 crore in the previous fiscal.
Bloomberg contributed to the story.
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