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Salient features of the IPO:

PB Fintech Ltd. (PBFL), which operates online insurance marketplace “Policybazaar” and credit comparison portal “Paisabazaar” is coming up with an IPO to raise around Rs. 5,710cr, which opens on 1st Nov. and closes on 3rd Nov. 2021. The price band is Rs. 940 - 980 per share.

* The issue is a combination of fresh and OFS. The company will not receive any proceeds from the OFS part of the issue. Of the net proceeds from the fresh issue, Rs. 1,500cr will be used for enhancing the visibility & awareness of its brands; Rs. 375cr will be utilized in funding new opportunities; Rs. 600cr will be used for funding strategic investments & acquisitions and Rs. 375cr will be used to expand business outside India. Residual funds will be used for general corporate purposes.

Key competitive strengths:

* Strong, consumer-friendly brands offering wide choice, transparency and convenience

* Proprietary technology, data and intelligence stack

* Collaborative partner for insurer and lending partners

* Business scale gives it unique self-reinforcing flywheels and strong network effects

* High renewal rates providing clear visibility into future business and delivering superior economics

* Benefits from economies of segmentation

* Capital efficient model with low operating costs

* Founders with clarity of purpose backed by experienced management

Risk and concerns:

* Unfavorable government policies and regulations

* Withdrawal of products from business partners

* Lower commission from business partners

* Difficulty in acquiring and retaining customers

* Declining operational efficiencies

* Business seasonality and continued slowdown in credit growth

* Competition from business partners

Below are the key highlights of the company:

* Considering the insurance penetration, protection gap and higher out of pocket spend for healthcare, the outlook for insurance sector growth is positive in the country. In terms of total premium across life and non-life insurance, the market for insurance products in India is estimated to be Rs. 7.6tn (USD 102bn) in FY20 and is expected to grow to Rs. 39tn (USD 520bn) by FY30, growing a 17.8% CAGR.

* In India, the online insurance market is highly underpenetrated with 10% of total premium sold online in FY20 as compared to 13.3% and 5.5% in the USA and China. Going forward, share of online insurance is expected to improve significantly due to rapid digital adoption.

* Backed by marquee investors like SoftBank, Themasek, Tiger Global, Premji Invest, PBFL operates India’s largest online insurance marketplace Policybazaar (launched in 2008) and credit comparison portal Paisabazaar (launched in 2014). Both Policybazaar and Paisabazaar platform offerings address the large and highly underpenetrated online insurance and lending markets in India.

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