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Policybazaar IPO oversubscribed by 16.6 times on final day with bids worth $7.5 billion

The initial public offering (IPO) of PB Fintech, which operates Policybazaar and Paisabazaar, ended up receiving robust investor attention, with bids for 57.23 crore equity shares received against an offer size of 3.45 crore equity shares, resulting in a subscription of 16.59 times on November 3, the final day of bidding.

Policybazaar logo on top of Policybazaar Mobile App Stock Image

Background: Rahul Chauhan via Behance

Qualified institutional investors, for whom 75 percent of the offer was reserved, have bid 24.89 times the size allotted for them. Non-institutional investors subscribed 7.82 times their total reserved portion. Retail investors responded aggressively to the offer, with their reserved part being subscribed to 3.31 times.

The company set a price band of Rs 940 to Rs 980 for each equity share, the offer has received bids worth almost $7.53 billion (Rs 56,093.64 crore). The Policybazaar initial public offering (IPO) began on November 1 with a target of raising Rs 5,700 crore, with Rs 2,569 crore being secured from the anchor book on October 29. The offer consists of a Rs 3,750 crore primary issue and a Rs 1,960 crore offer for sale by offering shareholders, including SVF Python II (Cayman).

The funds raised from the fresh issue will be used to strengthen visibility and awareness of its brands (Policybazaar and Paisabazaar) (Rs 1,500 crore), explore new opportunities to enlarge its consumer base, such as offline presence (Rs 375 crore), make strategic acquisitions and investments (Rs 600 crore), and expand its presence outside India (Rs 375 crore).

For the listing gains, the majority of analysts indicated a subscribe rating for the Policybazaar IPO. Some, however, raised concerns about the high valuation. Policybazaar was India’s leading digital insurance marketplace across all online insurance providers in FY20, with a market share of 93.4 percent based on the volume of policies sold. Analysts suggested that the e-insurance platform’s growing popularity pushed the operator to launch an IPO.

According to KRChoksey Research, Policybazaar’s revenue growth has been primarily influenced by the company’s presence in an emerging ecosystem, increasing penetration and awareness for financial products, reliable platform driven by proprietary technology, strong management lineage, and brand pull, as well as strong relationships with insurers, lenders, and repeat purchases from existing customers.

The brokerage admires the company’s growth strategy, willingness to try new things while remaining focused on its core business, international expansion, and inorganic expansion plans. Adding further it said, “considering multiple growth drivers and leadership position of Policybazaar in the digital ecosystem, investors should look to invest in the IPO for listing as well for long term gains.”

Nykaa IPO oversubscribed 82 times on final bidding day; retail portion subscribed 12 times

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