After Paytm and Mobikwik, fintech Policybazaar has also filed its draft papers for an initial public offering (IPO). PB Fintech Ltd, the holding company of the insurance platform provider Policybazaar, will be tapping the market with over Rs 6,000-crore issue, which includes an offer for sale by existing investors and a fresh issue of shares.
The company claims to have the country's largest online platform for insurance and lending products. Like Paytm and Mobikwik, Policybazaar is also a loss-making start-up in the financial services space. While these fintechs are building a business model by leveraging the power of data, the public markets are awaiting their profitability guidance. Here are the five things you should know about Policybazaar before investing in its IPO:
Foreign-owned and controlled company
Policybazaar is a foreign-owned and controlled company. While Makesense Technologies (Info Edge) holds 14.56 per cent stake in the company, global funds have a large holding with SVF holding 9.45 per cent stake, followed by Tancent (9.16 per cent), SVF Holdings (6.31 per cent), among others. The company's founder Yashish Dahiya has a 4.27 per cent stake in the company and is not classified as a promoter because of the minimum promoter holding requirement of the Securities and Exchange Board of India.
Status upgrade from insurance aggregator to 'direct broker'
A month ago, Policybazaar got the insurance regulator's nod to act as a direct (life and general) insurance broker. The company was operating as a 'web aggregator' for insurance products since its inception. Under the web aggregator model, the company was restricted in operating beyond its existing digital presence. As an insurance broker, the entire space of offline activities like claim assistance will open up for the company.
High business concentration
The company's four largest partners in terms of contribution to its revenue account for over 32 per cent of the revenue. Besides, big insurance companies, both in life and general, are also increasingly expanding their online presence. Many have digitized their entire processes from customer onboarding to claim settlement.
The company, which currently has operations in Dubai through a subsidiary, plans to scale up its operations in the broader Gulf Cooperation Council (GCC) region as well as South-East Asian countries. It plans to replicate the success of Indian model in the Gulf region, and has already allocated Rs 375 crore from IPO proceeds towards such potential business expansions internationally.
Policybazaar is also planning a major physical expansion and aims to set up 200 physical retail outlets by the end of 2023-24. "These outlets will serve as experience centers for consumers and provide them with the comfort of a local physical presence to help resolve any queries or service requests," says the company. It expects to spend Rs 150 crore out of the IPO proceeds for setting up retail outlets.
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