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Paytm to raise Rs 920 crore from Swiss Re for its insurance venture

Paytm Insuretech Private Limited (PIT), a subsidiary of the financial services firm Paytm, announced that it has signed a strategic partnership with Swiss Re, one of the world’s leading providers of insurance, reinsurance, among other types of insurance-based risk transfer.

Paytm app is seen on a smartphone in this illustration

Courtesy: Ruvic × Dado via Reuters

Swiss Re will inject around Rs 920 crore (in the form of equity shares and compulsorily convertible preference shares) in PIT (Rs 397.3 crore upfront and the remainder in tranches, subject to the completion of specific targets) for a fully diluted stake of 23 percent.

India’s insurance sector represents a remarkable opportunity considering the sector’s protection gap and under-penetration in contrast to the global average. According to RedSeer data, the gross written premium for non-life insurance is predicted to jump from $27 billion in FY2021 to $50-60 billion in FY 2026.

Paytm Insuretech seeks to offer innovative insurance products and solutions by incorporating Paytm’s customer base and merchant ecosystem. Swiss Re’s investment follows more than a year after Paytm entered the general insurance market with the acquisition of Mumbai-based Raheja QBE for Rs 568 crore. Both Swiss Re’s investment and Paytm Insuretech’s acquisition of Raheja QBE are subject to regulatory approval.

Vijay Shekhar Sharma, Chairman, MD, and CEO of One 97 Communications, Paytm’s parent company commented on the development saying, “We are excited to partner with Swiss Re for our insurance foray as a key strategic investor. It is an important milestone in our financial services journey of taking general insurance products to the masses. We look forward to gaining from Swiss Re’s global insurance capabilities and building innovative products to tap into the Indian market.” 

Paytm is planning the country’s biggest initial public offering, in which it seeks to raise Rs 16,600 crore from the public market at a valuation of $20 billion. The fintech firm has recently got approval from the market regulator SEBI, for its initial public offering. According to media sources, the company is considering increasing its IPO offer by Rs 1,700 crore, bringing the total IPO offer to a staggering Rs 18,300 crore.

The Noida-based startup is expected to increase its offer-for-sale, which means existing shareholders selling their shares would increase from Rs 8,300 Cr to Rs 10,000 Cr as per the DRHP filed with the SEBI.

According to an ET report, China’s Ant Financial, Paytm’s largest stakeholder (with 29.6 percent), is widely believed to liquidate roughly Rs 5,000 crore worth equity shares, shrinking its ownership in the fintech decacorn to 25 percent. The company is planning to go public on the stock exchange by Diwali. The fintech startup proposes to use the IPO funds to expand its ecosystem, as well as to attract and retain both customers and merchants.



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