PolicyBazaar’s IPO Approval Fails To Boost Unlisted Share Prices

The Securities & Exchange Board of India (SEBI) has approved the initial public offering (IPO) of PB Fintech, the parent company of insurtech startup PolicyBazaar. The development, however, has not been able to lift the investor sentiments in the unlisted space.

The share price of PolicyBazaar in the unlisted market was largely unchanged around INR 1,700-1,800 from Monday, as the trade remained tepid over concerns that the shares are overvalued and the IPO may eventually hit the market at around INR 1,100, Manan Doshi, cofounder of Unlisted Arena told Inc42.

The valuation concerns resulted in the fall in prices from INR 2,200 last week. Its shares started trading in the unlisted market around 15 days back at around INR 1,600 per share.

“Although several sellers are still quoting above INR 2,000, buyers are pitching in at around INR 1,800,” said Sandeep Ginodia, CEO of Altius Investech.

Ginodia said that if the IPO issue price comes at the market consensus of INR 1,100, the valuation of the startup would be around $5 Bn, while an issue price of over INR 2,000 would result in a valuation of $10 Bn – $11 Bn. 

The fintech unicorn is looking for a valuation in the range of $6 Bn – $7 Bn.

Analysts and traders expect the public offering to hit the market around Diwali.

Earlier this month, IPO-bound PB Fintech Limited infused fresh capital worth INR 99.9 Cr ($13.4 Mn) in its insurance aggregating platform PolicyBazaar.

As per the latest regulatory filings, PolicyBazaar Insurance Brokers Private Limited, in a meeting held on September 24th, the board of directors has approved allotting 20,20,202 equity shares of PolicyBazaar Insurance Brokers at a premium price of INR 485 to its parent firm PB Fintech Ltd. 

In August this year, PolicyBazaar joined the slew of Indian startups going for its IPO. The fintech startup filed its draft red herring prospectus (DRHP) with the market regulator for raising INR 6,017 Cr.

The offer would include a fresh issue of INR 3,750 Cr worth of equity shares and an offer-for-sale (OFS) of INR 2,267.50 Cr by existing shareholders and promoters.

Founded by Dahiya, Alok Bansal, and Avaneesh Nirjar in 2008, PolicyBazaar aggregates insurance policies from a range of providers for use-cases, including life insurance, automobile insurance, health insurance and more.

It has raised more than $766 Mn from 22 investors including SoftBank, Temasek, Info Edge, and others.

In March, PolicyBazaar executed a secondary sale of shares worth about $45 Mn, with existing investors such as private equity firm True North and some individual investors selling their stake. The secondary round valued the company at $2.4 Bn.

In FY21, the company reported INR 957.4 Cr in total income, up 12% over the previous fiscal. 

PolicyBazaar reported consolidated revenue of INR 855.5 Cr in the financial year that ended in March 2020 (updated as per DRHP disclosures), up from FY19’s income of INR 528.8 Cr.

In FY21, it reported a loss of INR 150.2 Cr, which is half of the INR 304 Cr loss reported in FY20.

However, Paisabazaar’s FY21 revenue took a hit due to the pandemic. While there was some recovery in the third and the fourth quarter of FY2021, the loan disbursals sold by lending partners on the Paisabazaar platform decreased to INR 2916.8 Cr in FY21 from INR 6549.6 Cr in FY20.

The market conditions for lending startups are expected to improve in the coming months as businesses continue their financial recovery and consumers look for short term credit boosts in 2021 and early 2022.

With the clearance from SEBI, PB Fintech has joined the list of new-age companies like Zomato, Nazara and CarTrade to get listed on the Indian stock exchanges. Recently, the IPOs of Fino Payments Bank, Nykaa and MobiKwik, were also approved by the regulator.