Policybazaar founders to cut sale of own shares in IPO by 85-90%

Yashish Dahiya and Alok Bansal, founders of PB Fintech–parent of Policybazaar–have significantly reduced the number of shares they are selling through the offer for sale (OFS) component in the
initial public offering (IPO) set to open on Monday. Sources aware of the matter said the increased interest in tech IPOs and the headroom for further growth in its business as well as likely valuation after the share sale led to the founders reducing their OFS by 85-90% by value.

Dahiya, who is also the chairman and CEO of PB Fintech, was supposed to sell his shares worth Rs 250 crore in the Policybazaar IPO as per the draft red herring prospectus (DRHP) filed in August. He will now sell shares worth Rs 30 crore, according to the latest red herring prospectus (RHP) filed by the company. Similarly, Bansal, also whole-time director and CFO at the firm, had intended to divest his holding to the tune of Rs 95 crore but now will sell shares worth just under Rs 13 crore. SoftBank, the largest shareholder with a stake of over 15%, is selling shares worth Rs 1,875 crore.

“They (founders) are talking with their money, more than anything, on the growth potential of the company and the commitment to it after the IPO as well,” said a person aware of the matter said. Policybazaar’s Rs 5,700 crore IPO is looking at a listing valuation of $6.15 billion. Owing to the abundance of liquidity in the global markets and bullishness on tech IPOs in India, startups are of the view their valuation would go higher after the listing as they continue to chase growth.

ET reported last week that
Policybazaar’s anchor investment slot had seen 40 times demand in terms of bids and leading insurance firms have also picked up stakes in the firm. It raised Rs 2,569 from 155 anchor investors.

“The headroom to grow is a lot more and it will continue after the IPO. The anchor bids have indicated the bullishness investors currently have on the business,” said another person aware of the company’s thinking.

Dahiya owns 4.27% in PB Fintech while Bansal has 1.45%, according to the RHP.

Policybazaar is among top-tier startups going public this year, joining the likes of Paytm, Nykaa and Zomato. The latter
made a setallar debut in July with a Rs 9,000 crore IPO. Policybazaar has set a price band of Rs 940-980 per share for the IPO that starts Monday and will be open for subscription until Wednesday.

Besides the above-mentioned startups, logistics startup Delhivery and e-pharmacy
PharmEasy are also likely to file their DRHPs this month and go public within the financial year 2022.