Policybazaar IPO: Indian Insurer Files for $800M+

PolicyBazaar Files for $809 Million IPO

PolicyBazaar, an Indian online insurance aggregator, has submitted paperwork for an initial public offering (IPO), aiming to secure $809 million in funding. This makes the company the fourth startup within the last two months originating from the South Asian market to explore entering public markets.

IPO Details and Funding Structure

According to documents filed with the Indian market regulator, PolicyBazaar intends to raise $504 million through the issuance of new shares. The remaining portion of the $809 million target will be generated by the sale of shares from current investors.

The startup, established 12 years ago, is backed by prominent investors including SoftBank, Falcon Edge Capital, Tiger Global, and InfoEdge. Consideration is being given to securing approximately $100 million in a pre-IPO funding round.

Investor Plans

Softbank is planning to divest shares valued at over $250 million. Meanwhile, the founders of PolicyBazaar are looking to sell shares totaling $52.7 million, as detailed in the filing documents.

PolicyBazaar’s Business Model

PolicyBazaar functions as an aggregator, enabling users to compare and purchase insurance policies – encompassing life, health, travel, auto, and property coverage – from a wide array of insurers directly through its website. This eliminates the need for traditional insurance agents.

The company’s operations extend beyond India, also serving customers in the Middle East.

Insurance Penetration in India

Currently, insurance access in India remains limited, with only a small percentage of the nation’s 1.3 billion citizens covered. Analysts suggest that digital platforms like PolicyBazaar are vital for expanding insurance services to a broader population.

Data from rating agency ICRA indicates that, as of 2017, insurance products had reached less than 3% of the Indian population.

Economic Context

The average annual income for an Indian citizen is approximately $2,100, according to the World Bank. ICRA’s estimates from 2017 showed that individuals who had purchased insurance were spending less than $50 annually on these products.

Market Growth Projections

PolicyBazaar projects significant growth in India’s life insurance market, anticipating an annual growth rate of 18.8% to reach ₹ 31.9 trillion (US$ 425 billion) by FY2030. This growth is expected to be fueled by positive macroeconomic factors, increased financial awareness, digitization, simplified processes, online distribution channels, product innovation, and supportive government policies.

Market Position and Competition

Analysts at Bernstein estimate that PolicyBazaar currently holds a 90% share of the online insurance distribution market. The platform competes with companies like Acko and Amazon in India.

Beyond insurance, PolicyBazaar also facilitates the sale of loans, credit cards, and mutual funds, processing over a million policies each month.

Bernstein analysts noted to clients that digital distribution through web-aggregators like PolicyBazaar currently represents less than 1% of the overall insurance industry in India, indicating substantial potential for expansion.

Recent IPO Activity

Recent weeks have seen IPO filings from other prominent Indian firms, including Zomato, which experienced a successful public debut last month, as well as fintech companies Paytm and MobiKwik.