SUMMARY
Founder Yashish Dahiya was supposed to sell equity shares worth INR 250 Cr, and will now offer for sale shares worth INR 30 Cr
Alok Bansal, founder, has also reduced his OFS value from INR 95 Cr to INR 12.75 Cr, while Rajendra Singh Kuhar will offer for sale stocks worth INR 3.5 Cr, down from INR 7.5 Cr
The reduction of 50-85% in OFS is reportedly a result of heavy investor traction in tech IPOs, as well as a likely increase in the valuation after the share sale
The much anticipated initial public offering (IPO) of PB Fintech, the parent company of lending startup, Paisabazaar and insurtech unicorn, Policybazaar, will open today (November 1) at the price band of INR 940-INR 980 per share.
In the total fundraise of INR 6,017 Cr from the public, the startup was slated to make a fresh issue of INR 3,750 Cr worth of equity shares. Its offer-for-sale (OFS) would comprise INR 2,267.50 Cr by existing shareholders and promoters — including founders Yashish Dahiya and Alok Bansal.
Offer For Sale is a process where private equity investors/shareholders offer their shares to the public, seeking partial or full exits. Policybazaar’s OFS issue looks something like this:
- Masayoshi Son-led SoftBank offloading shares worth up to INR 1,875 Cr
- Yashish Dahiya will offload stocks worth INR 30 Cr
- Alok Bansal selling stocks worth up to INR 12.75 Cr
- Shikha Dahiya to offload stocks worth up to INR 12.25 Cr
- Rajendra Singh Kuhar to offer for sale stocks worth up to INR 3.5 Cr
- Founder United Trust will offload 267,500 shares in the OFS.
But this wasn’t the case in the DRHP. In the pre-IPO prospectus, Dahiya was supposed to sell equity shares worth INR 250 Cr, while Bansal had offered a stake worth INR 95 Cr. Kuhar, too, has reduced his OFS by more than half from INR 7.5 Cr.
The reduction of 50-85% in OFS is a result of heavy investor traction in tech IPOs, according to reports. The headroom for further growth in its business as well as likely valuation after the share sale led to the founders reducing their OFS value.
PolicyBazaar’s parent PB Fintech is backed by marquee investors such as SoftBank, Temasek, Info Edge, among others. It has raised $766 Mn from 22 investors to date and achieved unicorn status in 2018. Currently valued at $5.5 Bn, the startup is eyeing a valuation of $7 Bn.
It is interesting to note that PolicyBazaar had made a private placement of its equity shares to Falcon Edge Capital at INR 366 per share, in February 2021. The unrealistic 3x jump to the upper price band is enormous, considering that the startup is running in losses. But, the founders and promoters are banking on the growth wave.
In a media briefing pre-IPO on October 27, the founders had mentioned that while they were not earning profits, PolicyBazaar and PaisaBazaar are eyeing the underpenetrated insurance market in India. The startup claims to be working on efficiency rather than profitability.
“Profitability is a little more complicated than efficiency because it also involves not doing experiments,” Dahiya said in the briefing. “I think shareholders are going to pay value for this [efficiency], and our expectation is to derive value from selecting the right balance of efficiency and profitability.”
