Telco/Internet specialist

Kirk Boodry

Redex Research

Equity Capital Markets

The Oyo listing should be a win for Softbank Group, which owns 47% (pre-listing) for a mere $1.1bn but initial pricing talk of $10-12bn seems wildly optimistic when matched against comparable valuations for premium online travel companies like Airbnb (implied Oyo value $4bn) or India tech ($7bn). Last year we thought this was worthless, so the turnaround is a pleasant surprise but we would not be buyers over INR 80/share ($7bn).

The Oyo listing should be a win for Softbank Group, which owns 47% (pre-listing) for a mere $1.1bn but initial pricing talk of $10-12bn seems wildly optimistic when matched against comparable valuations for premium online travel companies like Airbnb (implied Oyo value $4bn) or India tech ($7bn). Last year we thought this was worthless, so the turnaround is a pleasant surprise but we would not be buyers over INR 80/share ($7bn).

Oyo and Softbank Group - This Would Be Generously Valued at $4-7bn but that Keeps CEO Under Water

Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<a href="https://www.smartkarma.com/entities/policybazaar-insurance-web-aggregator" target="_blank" data-smartkarma-citation="entities:33470:1" rel="noopener">Policybazaar Insurance Web Aggregator (1569999D IN)</a> operates an online platform for insurance and lending products and according to Frost &amp; Sullivan, the company’s lending platform (Policybazaar) was ranked India’s largest digital insurance marketplace with a 93.4% market share based on the number of policies sold. The company has filed for an IPO where it plans to raise gross proceeds of INR60,175m (US$783m) through the issuance of both new shares (INR37,500m) and sale of shares by existing shareholders (INR22,675m).The company’s products and services cater to the highly underpenetrated online insurance and lending markets in India that are currently undergoing structural changes including increased digitisation. The Covid-19 pandemic has accelerated this transition towards digital channels where physical KYC procedures, in-person insurance check-ups and physical verification of loan applications have dampened the growth of insurance and lending markets during the Covid-19 outbreak in India.Moreover, the credit lending market in India faces huge challenges in terms of credit scoring where only approx. 22% of the population have a valid credit score. Technology companies have been helping to address various challenges in the lending industry and the company’s Paisabazaar platform is widely accessed by consumers to obtain credit scores.

Policybazaar Insurance Web Aggregator (1569999D IN) operates an online platform for insurance and lending products and according to Frost &amp; Sullivan, the company’s lending platform (Policybazaar) was ranked India’s largest digital insurance marketplace with a 93.4% market share based on the number of policies sold. The company has filed for an IPO where it plans to raise gross proceeds of INR60,175m (US$783m) through the issuance of both new shares (INR37,500m) and sale of shares by existing shareholders (INR22,675m).The company’s products and services cater to the highly underpenetrated online insurance and lending markets in India that are currently undergoing structural changes including increased digitisation. The Covid-19 pandemic has accelerated this transition towards digital channels where physical KYC procedures, in-person insurance check-ups and physical verification of loan applications have dampened the growth of insurance and lending markets during the Covid-19 outbreak in India.Moreover, the credit lending market in India faces huge challenges in terms of credit scoring where only approx. 22% of the population have a valid credit score. Technology companies have been helping to address various challenges in the lending industry and the company’s Paisabazaar platform is widely accessed by consumers to obtain credit scores.

PB Fintech IPO: Poised to Benefit from Structural Changes in Insurance and Lending Markets in India

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<a href="https://www.smartkarma.com/entities/policybazaar-insurance-web-aggregator" target="_blank" data-smartkarma-citation="entities:33470:1" rel="noopener">Policybazaar Insurance Web Aggregator (1569999D IN)</a>/PB Fintech operates the Policybazaar and Paisabazaar platforms in India. Policybazaar is India’s largest digital insurance marketplace with a 93.4% market share based on the number of policies sold in FY20, according to Frost &amp; Sullivan. Paisabazaar is India’s largest digital consumer credit marketplace with a 51.4% market share, based on disbursals in FY20, according to Frost &amp; Sullivan. PB Fintech’s shareholders include SoftBank Vision Fund, <a href="https://www.smartkarma.com/entities/tencent-holdings-ltd" target="_blank" data-smartkarma-citation="entities:26:1" rel="noopener">Tencent (700 HK)</a>, Tiger Global and <a href="https://www.smartkarma.com/entities/info-edge-india-ltd" target="_blank" data-smartkarma-citation="entities:14461:1" rel="noopener">Info Edge India (INFOE IN)</a>.   PB Fintech is looking to raise Rs60.2 billion ($809 million) at an $5 billion valuation, according to press reports. The IPO comprises a primary raise of Rs37.5 billion and a secondary raise of Rs22.7 million. PB Fintech is also considering a pre-IPO placement of Rs7.5 billion in new shares. The pre-IPO placement amount will be deducted from the primary portion of the raise. India has a highly underpenetrated insurance market due to financial illiteracy, lack of awareness of insurance, low household disposable income, complex products and inefficiencies in distribution system. Insurance penetration (premium as % of GDP) is at 3.8% in India as compared to the global average of 7.2%. However, online distribution channels are changing the insurance distribution landscape in India. A key enabler of online distribution are digital insurance marketplaces which account for 54% of the total online insurance market in FY20, according to Frost &amp; Sullivan. Policybazaar, which is India’s largest digital consumer credit marketplace, is a direct play on the rising insurance penetration rates in India. <a href="https://www.smartkarma.com/entities/paytm-mobile-solutions-pvt-ltd" target="_blank" data-smartkarma-citation="entities:26149:1" rel="noopener">Paytm (PAYTM IN)</a>, which also has an insurance marketplace amongst its various offerings, offers an alternative but less direct exposure to the Indian insurance market. We discussed the Paytm IPO in <a href="https://www.smartkarma.com/insights/paytm-ipo-initiation-a-payments-led-super-app" target="_blank" data-smartkarma-citation="insights:54983" rel="noopener">Paytm IPO Initiation: A Payments-Led Super-App</a>. <div class="content-highlight">PB Fintech operates an asset-light capital model and does not underwrite any insurance or retain any credit risk on loans. Due to its market-leading platforms, the business is well positioned to benefit from the post-COVID-19 recovery in insurance policies sales and loan disbursals by its partners. In July 2021, PB Fintech obtained an insurance brokerage license will allow Policybazaar to broaden its consumer reach through the offline channel. Helped by strong brand recognition and retention rates, the favourable unit economics also suggest that profitability is within reach. Overall, we think that PB Fintech has attractive fundamentals.</div>

Policybazaar Insurance Web Aggregator (1569999D IN)/PB Fintech operates the Policybazaar and Paisabazaar platforms in India. Policybazaar is India’s largest digital insurance marketplace with a 93.4% market share based on the number of policies sold in FY20, according to Frost &amp; Sullivan. Paisabazaar is India’s largest digital consumer credit marketplace with a 51.4% market share, based on disbursals in FY20, according to Frost &amp; Sullivan. PB Fintech’s shareholders include SoftBank Vision Fund, Tencent (700 HK), Tiger Global and Info Edge India (INFOE IN).   PB Fintech is looking to raise Rs60.2 billion ($809 million) at an $5 billion valuation, according to press reports. The IPO comprises a primary raise of Rs37.5 billion and a secondary raise of Rs22.7 million. PB Fintech is also considering a pre-IPO placement of Rs7.5 billion in new shares. The pre-IPO placement amount will be deducted from the primary portion of the raise. India has a highly underpenetrated insurance market due to financial illiteracy, lack of awareness of insurance, low household disposable income, complex products and inefficiencies in distribution system. Insurance penetration (premium as % of GDP) is at 3.8% in India as compared to the global average of 7.2%. However, online distribution channels are changing the insurance distribution landscape in India. A key enabler of online distribution are digital insurance marketplaces which account for 54% of the total online insurance market in FY20, according to Frost &amp; Sullivan. Policybazaar, which is India’s largest digital consumer credit marketplace, is a direct play on the rising insurance penetration rates in India. Paytm (PAYTM IN), which also has an insurance marketplace amongst its various offerings, offers an alternative but less direct exposure to the Indian insurance market. We discussed the Paytm IPO in Paytm IPO Initiation: A Payments-Led Super-App. PB Fintech operates an asset-light capital model and does not underwrite any insurance or retain any credit risk on loans. Due to its market-leading platforms, the business is well positioned to benefit from the post-COVID-19 recovery in insurance policies sales and loan disbursals by its partners. In July 2021, PB Fintech obtained an insurance brokerage license will allow Policybazaar to broaden its consumer reach through the offline channel. Helped by strong brand recognition and retention rates, the favourable unit economics also suggest that profitability is within reach. Overall, we think that PB Fintech has attractive fundamentals.

PB Fintech (Policybazaar) IPO Initiation: Insurance Policy

India

PB Fintech Limited doing business as PolicyBazaar, develops and publishes an online financial services platform. The Company offers a consumer centric platform by partnering with financial services companies such as insurance companies to enhance their platform from a consumer e-commerce perspective.

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Policybazaar (POLICYBZ IN)

Oyo and Softbank Group - This Would Be Generously Valued at $4-7bn but that Keeps CEO Under Water

An Oyo listing is a likely win for Softbank, which owns 47% for a mere $1.1bn but pricing talk of $10-12bn is optimistic compared to the $4-7bn...

Kirk Boodry

PB Fintech IPO: Poised to Benefit from Structural Changes in Insurance and Lending Markets in India

PB's products and services cater to the highly underpenetrated online insurance and lending markets in India that are currently undergoing...

Shifara Samsudeen, ACMA, CGMA

PB Fintech (Policybazaar) IPO Initiation: Insurance Policy

PB Fintech (operates Policybazaar and Paisabazaar platforms) is looking to raise Rs60.2 billion ($809 million) through an IPO in India. Overall, we...

Arun George

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