PolicyBazaar’s Rs. 6500 crore IPO is on the way – know what to expect

PolicyBazaar, India’s largest online insurance marketplace, is gearing up for an initial public offering of about Rs. 6500 crores per its RoC filing. PB Fintech, its parent company, has received board approval for the same on 5 July in an Extraordinary General Meeting (EGM).

According to sources close to the company, PolicyBazaar is planning to submit the Draft Red Herring Prospectus (DRHP) by the end of July and complete its listing by November or December.

This IPO is likely to take PolicyBazaar’s valuation to about $4-5 billion, which is higher than all previous estimates. A significant jump like this goes on to underscore the investor’s interest in one of India’s most anticipated Fintech IPOs this year.

PolicyBazaar IPO: What’s cooking?

Here are the objectives that PolicyBazaar plans to meet with this initial public offering –

1. Fulfilling the capital expenditure
2. Meeting all corporate purposes
3. Scaling its Dubai subsidiary

Based on how PolicyBazaar plans to utilise the proceeds, prospective investors can take a call on whether to subscribe to this IPO or not.

Will the PolicyBazaar IPO be a good play?

Started off as an insurance comparison website in 2008, PolicyBazaar has come a long way. They are now a leading insurance aggregator platform, featuring various policies from more than 35 companies. Moreover, the company has now ventured into UAE with its subsidiary PB Fintech FZ LLC.

Here are some notable reasons to subscribe to this PolicyBazaar IPO –

1. PolicyBazaar made its debut in 2008 and continues to remain a favourable platform to compare and shop insurance policies from. According to the company data, they receive more than 100 million visitors a year and sell about 4 lakh insurance policies monthly.
2. Over the years, the company has received funding of about $766 million in 13 rounds, which puts the company on a strong base.
3. The Dubai-based venture of PolicyBazaar, i.e. PB Fintech FZ LLC, presents a great opportunity for the company to expand its market footprint. Presently, this venture has sold about $100 million worth of term insurance plans, and PolicyBazaar plans to rally this figure to $1 billion. In this regard, the company has also received additional funding of $75 million from Falcon Edge Capital.
4. PolicyBazaar recently received its insurance broking licence from IRDAI, the Indian insurance market regulator. This licence will enable the company to diversify its business verticals, such as setting up a Points of Presence Network, claim assistance, and various offline services. This will also help the company to charge a fee for web aggregation and commission.
5. Considering its finances, the company registered a significant 147% increase in revenue in 2020. It rose from Rs. 345 crores in FY19 to Rs. 854 crores in FY20.

Besides these aforementioned pointers, a strong employee base paired with a robust business plan is another vital reason to trust PolicyBazaar as an investment option. Nonetheless, it is imperative to go through the details of a company and its financials to make an informed decision.

Reasons for the delays in PolicyBazaar’s IPO

According to company sources, the IPO for PolicyBazaar is getting delayed due to this ongoing pandemic. However, different departments of the company are working closely to complete this process, which is filling the DRHP by the end of July.

Moreover, after filling for the IPO, PolicyBazaar needs clearance from both SEBI and IRDAI. Since the insurance sector in India is a highly regulated market, such approvals take time. Thus, they are expecting to complete the entire process by November or December.

Parting words

In its segment, i.e. online insurance, PolicyBazaar is a leader, trumping the likes of BankBazaar and Acko.

PolicyBazaar’s CEO, Yashis Dahiya, has said that, at present, about 6 crore families in India can afford a meaningful private insurance plan. Estimates say these 6 crores will become 15 crores in the next 10 years. However, presently, only about 15% of these families have insurance policies. This statement only reflects the potential PolicyBazaar holds.

Frequently Asked Questions

1. Who are the investment bankers to this PolicyBazaar IPO?

Morgan Stanley, Kotak Mahindra Capital, Citi Bank, and ICICI Securities are the investment bankers to this PolicyBazaar IPO.

2. Who is the registrar of this PolicyBazaar IPO?

There is no relevant information available yet regarding this.

3. Who are some notable investors of PolicyBazaar?

Premji Invest, True North, Tiger Global, Info Edge, and Ribbit Capital are some of the notable investors of PolicyBazaar.

4. When will PolicyBazaar IPO open for subscription?

No information regarding the opening of PolicyBazaar IPO is available yet.

5. What is the issue size of PolicyBazaar IPO?

The aggregator intends to raise approximately Rs. 6500 crores via this IPO.