PB Fintech, the parent company of PolicyBazaar and PaisaBazaar, has filed its draft red herring prospectus (DRHP) with markets regulator Securities and Exchange Board of India (Sebi) to raise Rs 6,017.5 crore via an initial public offering (IPO). The IPO will consist of a fresh issue worth Rs 3,750 crore and an offer for sale (OFS) of Rs 2,267.5 crore.
SVF Python II (Cayman) is offloading shares worth Rs 1,875 crore, and other shareholders will sell shares worth Rs 392.50 crore, of which Yashish Dahiya, chairman and CEO of the company, will be selling Rs 250 crore worth of shares.
In its DRHP, the company has said it may consider a further issue of equity shares through private placement up to Rs 750 crore before filing the prospectus with the registrar of companies (RoC).
Net proceeds from the public offering (fresh issue) will be used to enhance the visibility of the brand. The company said it will use around Rs 1,500 crore out of the net proceeds to fund marketing initiatives over the next three years.
Further, it intends to utilise Rs 375 crore to expand the consumer base, including offline presence; Rs 600 crore for strategic acquisitions and investments; Rs 375 crore for expanding presence outside India; and, some portion for general corporate purposes.
Kotak Mahindra Capital, Morgan Stanley, Citigroup Global Markets India, ICICI Securities, HDFC Bank, IIFL Securities, and Jefferies India are the book running lead managers to the issue. PolicyBazaar is the fourth new-age company after Zomato, Paytm, and MobiKwik to file its DRHP to list on the bourses.
The company said it incurred losses of Rs 150.24 crore in financial year 2020-21 (FY21). “We expect our costs to increase over time and our losses will continue given the investments expected towards growing our business”, it said. In FY20, the company posted a loss of Rs 304 crore and Rs 346.8 crore FY19.
“We have expended and expect to continue to expend substantial financial and other resources on, among others, developing a physical channel and investing behind experiments. These efforts may be costlier than we expect and may not result in increased revenue or growth in our business,” it said in the DRHP.
The company earned an income of Rs 957.41 crore in FY21, up 11.9 per cent from FY20 and 81 per cent from FY19. On the other hand, total expenses in FY21 stood at Rs 1,099.32 crore, down 4.43 per cent from Rs 1,150.4 crore in FY20. It spent Rs 367.84 crore on advertising and promotions in FY21, compared with Rs 445.2 crore in FY20 and Rs 345.85 crore in FY19.
The company has 15 physical offices as of July 15, 2021, and seeks to develop up to 200 outlets by the end of FY24. It recently received an insurance broking licence from the Insurance Regulatory Development Authority of India, which will allow it to expand its footprint in the offline space as well.
Its web aggregator insurance platform “PolicyBazaar” has 51 insurance company partners, representing 87.9 per cent of all licensed insurers in India. And, its other platform, PaisaBazaar, has 54 partnerships with large banks, large NBFCs, and fintech lenders.
According to the DRHP, in FY21, it originated premiums of Rs 2,742 crore for its insurance partners from new policies and a total premium of Rs 4,701.3 crore, including renewals. As of March 31, over 48 million consumers have registered on the PolicyBazaar platform and purchased over 19 million policies. In FY21, the annual number of visits to the website was 126.5 million.
“Approximately 21.5 million unique consumers have accessed their credit score from PaisaBazaar as of March 31. During FY19, FY20, and FY21, PaisaBazaar has enabled disbursals of Rs 5,101.5 crore, Rs 6,549.6 core, and Rs 2,916.8 crore, respectively.
According to Frost & Sullivan, PolicyBazaar was India’s largest digital insurance marketplace with a 93.4 per cent market share based on the number of policies sold in FY20, when 65.3 per cent of all digital insurance sales in India by volume was transacted through it.