All you need to know about the IPO from Policybazaar, India's sixth largest fintech startup
- Policybazaar is planning to raise ₹6,000 crore through its IPO
- Softbank will be taking a partial exit from the company through this public issue
- Policybazaar is one of the biggest beneficiaries of the boom in India’s insurance sector.
|Issue size||₹6,017.5 crore|
|Fresh issue||₹3,750 crore|
|Offer for Sale (OfS) or secondary share sale||₹2,267.5 crore|
|OfS by||SoftBank via SVF Python II|
|Book running lead managers||Kotak Mahindra Capital, Morgan Stanley, Citigroup Global Markets India, ICICI Securities, HDFC Bank Ltd, IIFL Securities and Jefferies India|
|Estimated valuation||$5.5-6 billion (media reports)|
Source: Draft Red Herring Prospectus filed with the Securities and Exchange Board of India (SEBI)
Policybazaar is one among a slew of tech IPOs to hit the Indian exchanges this year. It is also one of the country’s top fintech startups — the other one being Paytm — going for a public issue. 95% of Policybazaar’s revenue comes from commissions from insurance companies for selling policies.
Bank of America estimates the market size for insurance technology at $6 billion where Policybazaar is a leading player. Global peers include companies like the US-based Slice and Lemonade.
However, in India, only 4 in 100 Indians have any kind of insurance and, therefore, the headroom for growth is immense. The world average is 7.4. Insurance penetration in India, a year earlier, just before the pandemic, was an appalling 2.8.
The last one year has been good for insurers. According to a survey by Policybazaar, the average sum insured for health insurance policies bought on the online insurance marketplace almost doubled to ₹22.4 lakh by March 2021 compared to ₹11.4 lakh a year earlier. The company sold 7.2 million insurance policies in the year ending March 2021, up from 5.9 million a year earlier.
Policybazaar is one of the biggest beneficiaries of the boom in India’s insurance sector as a market leader in selling insurance online. Private equity firm True North Co’s partner Haresh Chawla, in an exclusive interaction with Business Insider, recalled a conversation he had with one of the top three insurance companies in India, a couple of years ago. The management told him that almost 10% of their business came through Policybazaar.
“I asked them, [say] there are 15 insurance companies in India. If for all 15 insurance companies, 10% market share or revenue is taken by PolicyBazaar, can you imagine when you add up the revenue for Policybazaar gets how big it becomes. And then the room fell silent. It's almost that the whole world situation is like the traditional companies are sleeping on these issues,” Haresh added.
AdvertisementIndia has 57 insurance companies, 24 are in the life insurance business, while 34 are non-life insurers, according to the India Brand Equity Foundation. Among the life insurers, Life Insurance Corporation (LIC) is the sole public sector company.
However, that’s just potential. For now, Policybazaar is a loss making company, although the losses have more than halved compared to three years ago.
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