Amid Market Rout, Tiger Global Dumps Another 2.98% Stake In Policybazaar

In another major blow to fintech player Policybazaar, venture capital firm Tiger Global has divested another 2.98% stake in the new-age tech startup. 

The VC firm offloaded shares of PB Fintech, the parent company of Policybazaar, for a cumulative sum of INR 522.5 Cr through open market transactions on Monday (November 14).

As per data available with the National Stock Exchange, Tiger Global executed the transaction through two of its portfolio companies – Tiger Global Eight Holdings and Internet Fund III. In total, these two subsidiaries dumped 1,34,17,607 shares for a total consideration of INR 522,50,27,707.

A breakdown of the data revealed that Internet Fund III sold 54.19 Lakh shares of the fintech player for an average price of INR 389.38. Similarly, Tiger Global Eight Holdings sold more than 79.98 Lakh shares at INR 389.44 apiece.

Interestingly, Hong Kong-based hedge fund WF Asian Reconnaissance Fund picked up 50 Lakh shares of Policybazaar at an average price of INR 388. The total size of the transaction stood at INR 194 Cr. 

This came just three days after the US-based VC fund offloaded 3.57% stake in PB Fintech through the open market. The VC fund had then sold more than 1.6 Cr shares of the startup in the range of INR 374.09 and INR 388.34 apiece, realising close to INR 606 Cr through the transaction.

Tiger Global held a 7.1% stake in Policybazaar at the end of the second quarter of the current fiscal year. Counting the two successive dumping rounds, it appears that the VC firm has diluted more than 92% of its ownership in the startup. 

Founded in 2008 by Yashish Dahiya, Alok Bansal, and Avaneesh Nirjar, Policybazaar operates an insurance aggregator platform that allows users to choose from a wide range of providers across multiple segments including life insurance, automobile insurance, health insurance, among others. 

Its sister platform, Paisabazaar, allows users to access their credit scores and aggregates financial products such as credit cards.

PB Fintech Feels The Heat

The sell off comes close on the heels of the expiration of the lock-in period for Policybazaar’s pre-IPO investors. The recently announced quarterly financial results have not made matters any better. 

The fintech player’s net loss narrowed 8.6% YoY to INR 186.5 Cr during the second quarter (Q2) of the financial year 2022-23 (FY23). However, operating revenue more than doubled to INR 573.5 Cr in Q2 FY23, up from INR 279.6 Cr during the corresponding period last year. 

The selloff has largely been the result of a negative market sentiment that has gripped the market. Retail investors have been wary of Policybazaar’s stock owing to a wide variety of reasons including mounting losses, no clear path to profitability, and apprehensions of a recession. 

This has put a spanner in the works for the fintech player which despite doubling its revenue has been facing the ire of investors. 

Earlier last month, Policybazaar chairman Yashish Dahiya said that the startup would turn profitable at a profit after tax (PAT)-level by FY24. He was later quoted as saying that Policybazaar was not in a hurry to turn profitable, and was rather focusing on growth. 

While the startup claims to hold more than 90% market share in the online policy aggregators space, its financial health is still far from profitable. This has made investors jumpy, with many such as Tiger Global, leaving it in droves. 

From an all-time high of INR 1,470 back in November last year, the market volatility has wiped off more than 73% of investor wealth in the past year. Policybazaar has also lost more than 11% of its market value in just the last month.

The negative market sentiment continues to weigh heavily on the new-age tech stock. At the end of intraday trading on Monday, Policybazaar shares closed 2.53% lower at INR 389.20 on the BSE.