Founders’ IPO bonuses and other takeaways from Policybazaar’s prospectus

After Paytm and MobiKwik, insurance and credit marketplace PB Fintech is the third fintech to file for an IPO. Chalking out an offline expansion and taking on upstarts will remain a challenge, even as it inches toward profitability. The IPO will also be a windfall for the founders and investors

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By 

Pratik Bhakta

Madhav Chanchani

August 03, 2021

12 Min Read

PB Fintech, which owns online insurance marketplace Policybazaar and lending portal Paisabazaar, on Monday became the third domestic Unicorn to file for an IPO this year. The company plans to raise about $800 million (Rs 6,017 crore), of which $500 million will be from a fresh stock issue to fund its operations and the remaining $300 million will be through a sale of shares.

The company will target a valuation of “at least $5 billion” in the issue, said sources, adding that the discussions are currently at $6 billion. This will be a huge mark-up for the 13-year-old Gurugram-based company. 

“The expectation has increased after the Zomato IPO. Earlier this year, the company was targeting a valuation of about $4 billion for the IPO,” one of them said.

Online food delivery platform Zomato was valued at $5.5 billion in its last major private fundraising round, and at $8.6 billion during its IPO last month. Following its public market listing, Zomato’s market capitalization is at $14-15 billion.

THE UPSHOT

As more Unicorns file for IPOs, handing out big incentives for founders is becoming the norm. And expectations on the valuation upside that public markets would deliver is also increasing with Zomato’s stellar listing showing the way

Policybazaar and Paisabazaar are both market leaders. More than 65% of all digital insurance sales in India happen through Policybazaar, and Paisabazaar handles 51% of all credit products sold through digital channels.

But PB Fintech—founded by Yashish Dahiya and Alok Bansal in 2008—will face increased competition, especially in the insurance business as Policybazaar enters the offline market. At the same time, the public share offering could give it access to more capital and visibility, besides liquid currency for potential acquisitions. 

PB Fintech’s valuation already has been increasing rapidly in the run-up to its IPO. It was valued at about $1.5 billion in July last year when SoftBank increased its stake in the company. Subsequently, in a slew of smaller secondary market share sales by the founders, it was valued at close Rs 24,345 crore, or about $3.3 billion, as per the company’s draft red herring prospectus. 

The CapTable sifted through the DRHP to dig out more details on PB Fintech’s business and its public share listing. Among the highlights are an IPO-linked incentive plan for the founders and the bonanza in store for the investors.

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