Softbank, Temasek-backed InsurTech Policybazaar files for mega $800m IPO, aims at $5bn valuation

Online insurance platform Policybazaar has filed a draft red herring prospectus with the Securities Exchange Board of India (Sebi) to raise $809m via an initial public offering (IPO), becoming the fourth startup in the past two months from the South Asian market to explore public markets. 

In papers submitted to the market regulator in India, PolicyBazaar said it is looking to raise $504m by issuing new shares while the rest will be driven by the sale of shares by existing investors.

The 12-year-old startup — backed by SoftBank, Falcon Edge Capital, Tiger Global, and InfoEdge — said it may consider raising about $100m in a pre-IPO round. Softbank plans to sell shares worth over $250m, while PolicyBazaar founders are looking to sell shares worth $52.7m.

PolicyBazaar serves as an aggregator that allows users to compare and buy policies — across categories including life, health, travel, auto and property — from dozens of insurers on its website without having to go through conventional agents. It operates in India as well as the Middle East.

Leveraging the power of technology, data and innovation, it provides convenient access to insurance, credit and other financial products and aims to create awareness amongst Indian households about the financial impact of death, disease and damage.

In fiscal 2020, Policybazaar was India’s largest digital insurance marketplace with a 93.4% market share based on the number of policies sold. Furthermore, 65.3% of all digital insurance sales in India by volume was transacted through Policybazaar.

Paisabazaar was India’s largest digital consumer credit marketplace with a 51.4% market share, based on disbursals in fiscal 2020. Paisabazaar is also widely used to access credit scores, with approximately 21.5 million consumers cumulatively having accessed their credit score through its platform as of March 2021. The firm said as a result of the second wave of the pandemic in India and lockdowns and restrictions imposed in response, it experienced a decrease in demand for travel and other insurance products and lower disbursal of loans on its platforms during the quarter ended June 2021 which will lead to lower revenue during the period.

In India, only a fraction of the nation’s 1.3 billion people currently have access to insurance and some analysts say that digital firms could prove crucial in bringing these services to the masses. According to rating agency ICRA, insurance products had reached less than 3% of the population as of 2017.

“India’s life insurance market is expected to grow at 18.8% p.a. to reach $425bn in FY2030, driven by favourable macro indicators, rising awareness towards financial products and services, digitization and simplification of products and processes, online channels for distributions, innovations and customizations in products and favourable government policies and regulatory push,” the startup said in the papers.

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