PB Fintech Block Deal: A Significant Stake Sale Amidst Strategic Divestments

Block Deal Details

In a notable financial development, PB Fintech, the parent company of PolicyBazaar and PaisaBazaar, experienced a significant block deal on May 17, 2024. A total of 83.7 lakh shares changed hands in the pre-opening trade, drawing considerable attention from market participants. The block deal involved the company’s promoters offloading 1.86 per cent of their equity for approximately Rs 1,053 crore. The floor price for the transaction was set at Rs 1,258 per share, representing a discount of over 6 per cent to the previous day’s closing price.

In an official filing, PB Fintech revealed that Yashish Dahiya, the Chairman and CEO, intended to sell up to 54 lakh equity shares, while Alok Bansal, the Vice Chairman and Whole-time Director, planned to sell up to 29,70,578 equity shares. This move is part of a strategic initiative to raise funds primarily for the payment of taxes related to current and future Employee Stock Ownership Plan (ESOP) exercises. Post-sale, Dahiya will retain a 4.83 per cent stake, and Bansal will hold a 1.63 per cent stake in the company on a fully diluted basis. Importantly, there are no plans for further share sales by the promoters for at least one year, as confirmed by the company’s disclosure.

Temasek Holdings’ Exit

In a parallel development, Temasek Holdings, through its entity Claymore Investments (Mauritius), exited its entire stake in PB Fintech. On Thursday, Temasek divested 24 million shares at a price of Rs 992.8 per share, resulting in a transaction valued at Rs 2,425.4 crore. This strategic exit follows the recent profitable quarter reported by PB Fintech and aligns with similar divestments by other investors, including Japanese firm SoftBank.

Temasek’s exit came a day after PB Fintech recorded its first-ever profitable quarter, with a profit of Rs 37.2 crore for the three-month period ending December 31, 2023. This marked a significant turnaround from a loss of Rs 87 crore in the same period the previous year. The company’s shares have shown impressive growth, gaining 67 per cent in 2024 so far.

Company Performance and Future Outlook

PB Fintech has been on a positive trajectory, bolstered by its inclusion in the MSCI India index, which could result in an inflow of up to USD 250 million or more. In the fourth quarter of the fiscal year 2024 (Q4FY24), the company reported a profit of Rs 60 crore, following a break-even performance in the previous quarter. Additionally, PB Fintech announced plans to divest its holdings in Visit Health, a wholly-owned subsidiary, in a deal expected to bring in Rs 76 crore.

The company’s recent profitability and strategic divestments highlight its robust growth potential. Despite the Reserve Bank of India’s recent guidance on unsecured loans, CEO assured that it would not significantly impact PB Fintech’s business, given the minimal contribution of low-ticket unsecured credit to their overall revenue.

Shares of PB Fintech Ltd were trading at Rs 1,309.25, down 2.34% from yesterday’s closing price of Rs 1,340.60. The stock has delivered 105.11% return over the past 1 year

Conclusion

The recent block deal involving PB Fintech’s promoters and the complete exit of Temasek Holdings mark significant scrutiny of the company. These transactions underscore the strategic financial manoeuvres by key stakeholders, aimed at optimizing their holdings and to raise funds primarily for the payment of taxes. With a strong performance in the recent quarters and strategic moves to streamline operations, PB Fintech is well-positioned to sustain its growth momentum.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.