The offline imperative fuelling PolicyBazaar's IPO push

13-year-old PB Fintech almost single-handedly created the online insurance distribution market with PolicyBazaar. As it seeks to grow offline—digital channels account for only 1% of India’s insurance sales—PolicyBazaar needs to reboot. Its IPO prospectus gives us a glimpse of what is in store

With PB Fintech’s IPO, insurance aggregator PolicyBazaar will raise as much capital in one go as it did in its first 13 years

The company saw revenue growth slowing; it can return to the path of profitability if it chooses to

Aggregating insurance online has limitations, so it is expanding offline. But disrupting offline distribution will be challenging

As with all aggregators its relationship with insurance partners decides its success or failure

In the 13 years since it was founded, online insurance aggregator PolicyBazaar, part of PB Fintech Ltd, raised nearly $767 million from at least a dozen different investors. In a draft red herring prospectus filed on 2 August enroute to an Initial Public Offering (IPO), PB Fintech laid out plans to raise more than that in one go—Rs 6,017.5 crore ($811 million).

The group with its two marketplaces—PolicyBazaar for insurance aggregation and PaisaBazaar for lending—is a penny-pinching, conservative firm compared to many internet companies. PolicyBazaar is its biggest asset, bringing in more than half of PB Fintech’s revenue. In its journey so far, PB Fintech has burnt only about $50 million. Which begs the question—why does it actually need so much money?

The insurance industry of today isn’t like the one PB Fintech stepped into with PolicyBazaar, back in 2008. The aggregator almost single-handedly created the category of online insurance sales. Now, there are a whole host of newly minted insurance startups, like Plum and Even Health, disrupting insurance distribution. Even those not remotely connected to the insurance business—from payments apps such as Paytm* and PhonePe to mobility company Ola—want to distribute insurance products. It’s a mad dash towards growth.

Price comparison

PolicyBazaar began life by letting users compare prices of different insurers. It helps users buy a variety of insurance policies through its website, either by themselves or with assistance from an army of telecallers.

And if there’s one thing that all of them have in common, aside from insurance ambitions, is the bottomless pit bottomless pit The Ken The tail of acquisitions wagging India’s funding dog Read more of capital at their disposal. In such an environment, PB Fintech’s listing would ensure it has as much dry powder at its disposal as possible in order to remain competitive.

The IPO also frees it from having so many large investors, which likely constrains it from making long-term strategic decisions. By going public, instead of answering to over a dozen different shareholders like SoftBank, Tiger Global, InfoEdge, Tencent among others, it will now be answerable to one large group of shareholders. The company declined to respond to The Ken’s questions, citing regulatory reasons.

The web aggregator is being valued like an internet startup, according to multiple media reports. But it’s making a sharp turn away from just selling online, aiming, instead, to become an omni-channel distributor with a big offline push. In June 2021, it obtained a broker’s licence from insurance regulator IRDAI IRDAI IRDAI Insurance Regulatory and Development Authority . This allows PolicyBazaar to also sell insurance products offline, including via field agents.

AUTHOR

Arundhati Ramanathan

Arundhati is Bengaluru-based. She is interested in how people use money in the digital age and how new economies will take shape based on that interaction. She has spent over 12 years reporting and writing on various subjects. Previous stints were at Mint, Outlook Business and Reuters.

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