Policybazaar files draft papers for Rs 6,017 crore IPO

It has joined a number of other new-age fintech peers—Paytm, Mobikwik, Nykaa and Zomato–who have announced their public issues.

The company and its shareholders seek to raise Rs 6,017 crore from the market. It comprises fresh issue of Rs 3,750 crore and an offer for sale worth Rs 2,267.5 crore. SVF Python II (Softbank) is the major PE investor looking for an exit. Besides Yashish Dahiya, CEO of the company will also offload part of his stake, along with other shareholders.

The company said it will use the proceeds from the IPO to look for new opportunities to expand its consumer base including offline presence, strategic investments and acquisitions, expand its presence outside India, and for general corporate purposes.

The company is yet to report a profit and has incurred restated losses of Rs 150 crore, Rs 304 crore and Rs 3,47 crore in fiscal 2021, 2020 and 2019, respectively. Moreover, there is no expectation that it will come into black in the near future.

“We expect our costs to increase over time and our losses will continue given the investments expected towards growing our business. We have expended and expect to continue to expend substantial financial and other resources on, among others, developing a physical channel and investing behind experiments,” said the company in its draft filing. “These efforts may be more costly than we expect and may not result in increased revenue or growth in our business.”

In a way, the company has managed to cut down on the losses even when the growth has been impressive, which can provide hopes to the investors. However, there are some headwinds like inflation and ongoing pandemic, which Policybazaar thinks will affect its business.

The company also said during the Covid-19 pandemic, Paisabazaar’s revenues were significantly reduced due to constraints on its lending partners.

“While Paisabazaar’s revenues had considerably recovered towards the end of fiscal 2021 due to high demand despite the pandemic, there continues to be constraints due to contained responses from lending partners such as not providing more flexible KYC requirements, which have a direct negative impact on the onboarding process, and as a result on our revenue,” it added.

Kotak Mahindra Capital, Morgan Stanley, Citigroup Global Markets India, ICICI Securities, HDFC Bank Ltd, IIFL Securities and Jefferies India are the book running lead managers to the issue.