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Should you apply for PolicyBazaar IPO? Here are 9 things you must know

PB Fintech posted a consolidated loss of Rs 150.24 crore in FY21. The loss was much less compared to a loss of Rs 304.03 crore seen in FY20.

Sakshi Batra
Last Updated : November 1, 2021, 15:35 IST

Policybazaar is backed by marquee investors such as Softbank, Temasek, Info Edge, among others.

The much anticipated PolicyBazaar’s parent firm PB Fintech’s initial public offering has opened for subscription today. The company has already garnered Rs 2,569 crore from anchor investors ahead of the IPO. PB Fintech is a leading online platform for insurance and lending products and operates Policybazaar and Paisabazaar and via these platforms provides convenient access to insurance, credit and other financial products. Here are 9 key things you must know before subscribing to the issue.

1. Issue Details

The company plans to raise Rs 5,826 crore via the IPO. The issue comprises a fresh issue of shares worth Rs 3,750 crore, along with an offer for sale (OFS) of shares worth Rs 1,959.72 crore by existing promoters and shareholders.

2. Offer-For-Sale

Primarily, investor SVF Python II (Cayman) will sell shares worth Rs 1,875 crore. As of now, Cayman holds 9.45% stake. Founders Yashish Dahiya and Alok Bansal will now sell fewer number of shares via OFS. According to the RHP, Dahiya owns 4.27%, while Bansal has 1.45% in PB Fintech. As per news reports, Dahiya, was supposed to sell his shares worth Rs 250 crore as per the draft red herring prospectus (DRHP) filed in August. However, as per the latest DRHP filed by the company, he will now sell shares worth Rs 30 crore. Increased interest in tech IPOs and the headroom for further growth in its business.

3. IPO Price

Policybazaar has set a price band of Rs 940-980 per share for the IPO.

4. Objective

India is an underpenetrated insurance market so the the net proceeds from the fresh issue of Rs 3750 crore will be used for several purposes including Rs 1,500 crore will be used for enhancing the visibility and awareness of its brands, Rs 375 crore will go to fund opportunities, Rs 600 crore will be used for funding strategic investments and acquisitions, and Rs 375 crore will be used to expand the business outside India.

5. Financials

PB Fintech posted a consolidated loss of Rs 150.24 crore for the FY21. The loss was much less compared to a loss of Rs 304.03 crore seen in FY20. Revenue from operations grew 15 per cent year-on-year to Rs 886.66 crore in FY21.

6. Grey Market Premium

Policybazaar shares are currently trading at a premium of Rs 150 in the grey market indicating higher demand.

7. What’s for retail investors?

Investors can put a bid for minimum of 15 equity shares and in multiples of 15 equity shares. PB Fintech has set side aside 75% of the total offer for the qualified institutional buyers (QIBs) while 15% has been reserved for non-institutional buyers . The remaining 10% issue share will be reserved for retail investors.

8. About the company

In FY20, Policybazaar was India’s largest digital insurance marketplace with 93.4% market share based on number of policies sold, and constituted 65.3% of digital insurance sales by the number of policies sold.

Paisabazaar was launched in 2014 to provide personal loans and credit cards. It was India’s largest digital consumer credit marketplace with a 53.7% market share, based on disbursals in FY21.

The company generates revenues from commission and additional services. Going forward, the company aims to broaden and deepen consumer reach in India

9. Expert Take: KR Choksey

Factors that are a big positive for the company include its large, underpenetrated and growing market. Add to it the leadership in digital marketplace, strong ability to attract new consumers.

The factors that make the company susceptible to risks include that it has a history of losses and the company anticipates increased expenses in the future. Non-compliance to regulations is a major threat to the company’s business.

Most brokerage houses have a subscribe rating for listing gains and for the long term looking at growth opportunities but are also wary about the high valuations des

Published: November 1, 2021, 12:06 IST

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