PB Fintech, the parent company of Policybazaar, launched the platform in 2008. The company aimed to provide consumers with a single platform to find all the information regarding different insurance policies with transparency. Later on, the platform also opened up services to buy and sell their insurance products and policies. The company currently has an association with 51 insurer partners and offers 340 insurance policies, including term, home, health, travel, motor, and life insurance. The company has the largest market share in digital insurance, with 93.4% of the total business. The company also registered more than 65% digitally sold insurance policies. In this article, we take a closer look at the PolicyBazaar IPO Review and its possible future prospects.
Policybazaar works on a lead-generating model. It is the reason for the success of the company. The team of the company analyzed the Indian society setup. They found out that people in India first carry out intensive research before buying any policy. As a result, it came up with a full detailed and comparative analysis of the insurance policies on its platform.
The end-user compared different policies regarding the quality, risks covered, price, and various other subjects. Thus, it developed trust and provided customer support that the policy seekers always wanted. Later on, it started providing policies on its platform itself. As a result, the platform became one solution for the end-users, from research, information to buying the policy they needed.
The company carries out its task in three different phases. PB Fintech, through Policybazaar, offers its users services of
- pre-purchase research,
- purchase, payment, medical check-up, and paperwork assistance
- post-purchase management of the policy. Refunds, Claims, and Other formalities.
PB Fintech, after Policybazaar, also launched another platform PaisaBazaar in 2014. The platform aimed to provide transparency with ease for personal loans and credit cards. Till March 2021, the PolicyBazaar platform registered 4.8 crore consumers and 1.9 crore policies, holders. The company was initially founded by Yashish Dahiya, Alok Bansal, and Avaneesh Nirjar. Yashish Dahiya is currently the Chairman and Executive Director of the company. Dahiya holds a stake of 4.27% in the company.
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OBJECTS OF THE POLICYBAZAAR IPO ISSUE:
- Prepayment of all the loans of the company, which be availed on a consolidated basis.
- To meet corporate targets.
- To fund the working capital requirement.
BASIS OF THE POLICYBAZAAR IPO OFFER:
- The company holds charge of consumer-friendly and powerful brands. The brands provide a highly customer-supportive, transparent, and wide range of services to their clients.
- The company is a pure FinTech company with a highly innovative database system and expertise in the management of the same.
- The company has a strong relationship with the Insurer and Lending Associates.
- The company has a strong networking system.
- The company registered a high renewal rate. It ensures their clear vision of the future, economics, and business operations.
- The advantages of segmented economies
- The company works on a capital-efficient model, which allows them for Low Operating Expenses.
- The company’s promoters have a clear vision; they are highly skilled, qualified, and supported by a strong management team.
POLICYBAZAAR IPO DETAILS:
Policybazaar is a company with its headquarters in Gurgaon. The company recently got the approval of SEBI to float their IPO in the market. The IPO of the company consists of both an issue of fresh equity worth Rs. 3,750 Crore along with an OFS been brought forward by various selling shareholders worth Rs. 2,267.50 Crore. The company intends to raise a sum of Rs.6,017.50 Crore through the IPO.
Through the OFS, the major stake will be sold by the SVF Python II (Cayman), it will offload their stake worth Rs 1,875 crore. The other selling stakeholders will offload their stake of Rs 392.5 crore. The company also plans to carry out a pre-IPO offer inclusive of the total IPO worth Rs.750 crore. Check Day by Day IPO Subscription Details (Live Status)
The company stated that the funds from IPO will be divided into various segments:
| For the purpose of enhancing the awareness along with the visibility of the company including all the brands of the company. | Rs.1,500 Crore |
| For the purpose to provide new opportunities for company’s consumer base expansion and expansion of the company in the offline presence | Rs.375 Crore |
| Funding strategic investments and acquisitions | Rs.600 Crore |
| Expanding presence outside India | Rs.375 Crore |
| IPO Opening Date | November 01, 2021 |
| IPO Closing Date | November 03, 2021 |
| Issue Type | Book Building Type |
| Face Value | Rs. 2/ Equity Share |
| IPO Price | Rs.940 – Rs.980/ Equity Share |
| Market Lot | 1 lot of 15 shares |
| Minimum Order Quantity | 15 |
| Minimum Order Quantity Price | Rs. 14,700 |
| Maximum Order Quantity | 195 |
| Maximum Order Quantity Price | Rs. 191,100 |
| Listing At | BSE, NSE |
| Issue Size | 6,017.50 Crore |
| Fresh Issue | 3,750 Crore |
| Offer for Sale | 2,267.50 Crore |
| Basis of Allotment Date | November 10, 2021 |
| Initiation of Refunds | November 11, 2021 |
| The Credit of Shares to Demat Account | November 12, 2021 |
| IPO Listing Date | November 15, 2021 |
| Basis of the Allotment Type | % Of the IPO Offer |
| Qualified Institutional Buyer | 75% |
| Non-Institutional Investor | 15% |
| Retail | 10% |
WEAKNESS AND THREATS OF POLICYBAZAAR IPO:
- The company is engaged in business operations where there is stiff competition, the fast-changing financial industry. It makes it the company difficult to assess the future aspects of the sector.
- Currently, the company is a loss-making company. The company also expects that its margins will contract and other expenses will rise in the future.
- The company is subject to various rules and regulation that needs to be followed in the Insurance business. Any failure of compliance with these rules and regulations can hamper the business aspect of the company.
- The company is also subject to database management challenges, as the company holds a large amount of data.
- The company can also face a threat of Cyber Security, IT disruption as the company is engaged in digital transactions and a large amount of data analytics.
- The company’s business operation might endure if they cannot draw in, instruct, and hold their experienced management and other investors.
- The company heavily relies on the Digital and Online platform for its business. Offline sales hardly contribute to their revenue.
- The company is also vulnerable to the inability to sufficiently manage any kind of extortion on its digital platform. It could affect the reputation of the company.
- A credit emergency or a drawn-out credit market breakdown could contrarily affect the business of the company.
- The directors and the subsidiary of the company are subject o trial under legal procedures.
- The company has High working expenses as it spends around 40% of its income on promotions and 45% on giving different employee benefits. Due to the structure, the growth expansion of the company becomes very restricted.
- The company has Negative Margins of EBITDA.
- The company faces stiff competition from many other organized players and some of the unorganized players. Though the company’s market share is the largest, the margins of operations for the company are very thin.
Also Check : List of Mainboard IPO’s in India.
Also Check : List of Upcoming SME IPO’s in India.
STRENGTHS AND GROWTH ASPECTS OF POLICYBAZAAR IPO:
- The insurance sector is expected to grow with a CAGR of 17.8% till FY30. The market share is expected to rise to Rs. 39 Lakhs Crore from what it is presently at Rs.7.6 Lakhs Crore.
- The Insurance sector in India is currently undervalued; after the COVID breakout, people’s interest has emerged in Life Insurance Sector and Term Insurance Sector Policybazaar; being the leader in both segments in Digital mode will be the highest beneficiary of the growth of the insurance sector in the country.
- The outstanding loan balance of India’s consumer lending market is expected to grow with a CAGR of 9.1%. In FY30, it will rise to Rs 78.1 lakh crore from Rs 32.8 lakh crore.
- It is currently India’s largest online insurance operator.
- The company aims to draw in new customers while extending the relationship with current purchasers for Policybazaar and Paisabazaar. For this, the company plans to carry out a plan to increase the visibility and the awareness of the company’s service.
- The company also intends to use its leverage execution abilities. It will help the company to strengthen its associations with the lending partners.
- The company intends to invest in brand awareness plans, protection, and individual insurance credit to boost its business operations.
- The PB Fintech plans to co-make and plan inventive items to address the advancing needs of the consumers, empower underserved portions to get to acknowledge, construct lifetime commitment with buyers and make annuity income streams.
- The company also plans to carry out strategic investments and acquire the business to upgrade its product and service portfolio.
- The company intends to increase activities and brand presence in Dubai and the Middle East Regions. The company also plans to expand its business operation in Southeast Asia by repeating its demonstrated plan of action in India alongside investigating inorganic development openings.
- The company operates on the Amazon Polly to carry out Voice Broadcasting, Inbound Calls, and critical voice alerts. Due to the Amazon Polly system, the company has improved its customer support service and intensive benefit over its peers.
- The company also registered an increase of the userbase throughout with a Pan India presence. The company expects that its userbase will further improve with a CAGR of 18% till FY25.
- Policybazaar acquired various rounds of funding from various institutional investors. It acquired funding of $75 million by US-based Falcon Edge Capital and a major investment by the SoftBank of $200 million. In total, the company has raised an investment of $766 million.
- The platform records around 100 million viewers every year. The company also records an average of 4 lakh policies being sold every month through their platform.
- The company also acquired the IRDAI license. It will allow the company to scale up its operations.
- The company registered a market share of 25% in the Term Insurance sector of the country.
- The company also intends to benefit from its expanding UAE operations. The company’s subsidiary sold $100 million of term insurance plans. The company estimates their business through this subsidiary will increase further to $1 billion in coming years.
- The company intends to register an increase in their sale of policies due to rising awareness of the various insurance policies after the COVID-19 pandemic.
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FINANCIAL TRENDS OF POLICYBAZAAR IPO:
| PARAMETERS | MARCH 21 | MARCH 20 | YoY % |
| Core EBITDA Margin (%) | -18.00 | -41.46 | 56.57 |
| EBIT Margin (%) | -14.69 | -36.66 | 59.93 |
| Pre-Tax Margin (%) | -16.01 | -38.23 | 58.13 |
| PAT Margin (%) | -16.94 | -39.42 | 57.01 |
| Cash Profit Margin (%) | -12.28 | -33.29 | 63.11 |
| ROA (%) | -7.69 | -27.09 | 71.61 |
| ROE (%) | -10.04 | -39.06 | 74.30 |
| ROCE (%) | -8.00 | -32.16 | 75.13 |
| Asset Turnover(x) | 0.45 | 0.69 | -33.96 |
| Sales/Fixed Asset(x) | 4.24 | 5.97 | -28.94 |
| Working Capital/Sales(x) | 0.46 | 0.70 | -33.62 |
| Net Sales Growth (%) | 14.96 | 56.69 | -73.62 |
| Core EBITDA Growth (%) | 62.26 | 27.05 | 130.15 |
| EBIT Growth (%) | 53.94 | 15.51 | 247.74 |
| PAT Growth (%) | 50.58 | 11.67 | 333.38 |
| EPS Growth (%) | 59.18 | 11.67 | 407.01 |
| Total Debt/Equity(x) | 0.00 | 0.00 | 0.00 |
| Current Ratio(x) | 9.68 | 6.46 | 49.98 |
| Quick Ratio(x) | 9.68 | 6.46 | 49.98 |
| Interest Cover(x) | -11.17 | -23.46 | 52.40 |
| Particulars | For the year ended (in Cr.) | ||||
| 31-Mar-21 | 31-Mar-20 | 31-Mar-19 | |||
| Total Assets | 2,330.73 | 1,576 | 751.45 | ||
| Total Revenue | 957.41 | 855.56 | 528.81 | ||
| Loss After Tax | 150.24 | 304.03 | 346.81 |
PROMOTERS AND INVESTORS OF POLICYBAZAAR IPO:
The company is professionally managed. It does not have any significant promoter as 192 investors have a stake in the company. Some of the shareholders of the company are:
| Makesense Technologies | Tencent Cloud Europe | True North Fund |
| Tiger Global Eight Holdings | Claymore Investment | Startup Investments |
| PI Opportunities Fund | Falcon | Inventus Capital Partners Fund |
| SVF Python | Steadview Capital Mauritius | ABG Capital |
CONTACT DETAILS:
PB FINTECH LIMITED
Plot No.119, Sector – 44,
Gurgaon, Haryana – 122001 India
Tel.: + 91 124 4218302
E-mail: Care@policybazaar.com
Website: www.policybazaar.com
REGISTRAR:
Link Intime India Private Limited
C 101, 247 Park
L.B.S. Marg
Vikhroli (West)
Mumbai 400 083
Maharashtra, India
Telephone: +91 22 4918 6200
E-mail: policybazaar.ipo@linkintime.co.in
Website: www.linkintime.co.in
LEAD MANAGER(S):
- Kotak Mahindra Capital Company Limited
- Morgan Stanley India Company Private Limited
- Citigroup Global Markets India Private Limited
- ICICI Securities Limited
- HDFC Bank Limited
- IIFL Securities Limited
- Jefferies India Private Limited
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