Optimism over business prospects drove Policybazaar founders to reduce size of share sale via IPO

Yashish Dahiya and Alok Bansal, co-founders of PB Fintech which is the parent company of platforms Policybazaar and Paisabazaar, have significantly reduced the number of shares they will be selling through the Initial Public Offering (IPO), signaling bullishness over the company’s prospects.

According to the Red Herring Prospectus (RHP) Dahiya and Bansal will now be selling shares worth only Rs 30 crore and Rs 12.75 crore, respectively. When PB Fintech had filed its Draft Red Herring Prospectus (DRHP) back in August, Dahiya who is the CEO of the company was supposed to sell shares worth Rs 250 crore. As per the new numbers, his sale of shares has reduced by 88 percent.

CFO Bansal on the other hand was supposed to sell shares worth Rs 95 crore based on data in the DRHP. That number has now dropped by close to 87 percent.

A person aware of the changes said, “The founders are optimistic about the prospects of their business and they believe the returns that will come from their own business is much higher than other avenues.”

Additionally, the company was not in immediate need of the full planned amount of Rs 6,017 crore which made the founders hold on to their shares.

Shareholders Shikha Dahiya and Rajendra Singh Kuhar too have reduced the quantum of shares they will be selling. Shikha Dahiya will now sell shares worth Rs 12.2 crore, down from Rs 12.7 crore earlier. Kuhar’s share sale has been reduced to Rs 3.5 crore from Rs 7.5 crore in the DRHP.

With the reduction in the Offer For Sale (OFS) by founders and other shareholders, the IPO size now comes down to Rs 5,700 crore. Of the total IPO size, the primary issue size remains at Rs 3,750 crore.

In an interaction with Moneycontrol on October 27, Dahiya had said that around 70 percent of the total $400 million raised by the company over the past 13 years is still unused.

“We have built both Policybazaar and Paisabazaar at about $70 million each. There were times when Info Edge built out the entire business with just Rs 7.3 crores and that is an exception, but that was a different time. In these times building out a consumer internet brand with about $70 million is not a bad result,” he had said.

According to the RHP, SoftBank Vision Fund holds the largest stake in the company of 15.76 percent and is selling shares worth Rs 1,875 crore. This is followed by Makeshift Technologies (InfoEdge) and Tencent which hold 14.56 percent and 9.16 percent stake each. Dahiya owns 4.27 percent stake in the company according to the RHP.

The IPO of PB Fintech opened on November 1 and will close on November 3, 2021, with the price band set between Rs 940-Rs 980.

The company raised Rs 2,569 crore from 155 anchor investors and witnessed retail subscriptions of 25 percent on November 1, the first day of bidding.