PB Fintech Ltd. (PBFL), which operates online insurance marketplace “Policybazaar” and credit comparison portal “Paisabazaar” has come up with an IPO to raise around Rs 5,710 cr, which opens on 1st Nov. and closes on 3rd Nov. 2021. Brokerage firm Choice has given “Subscribe for Long Term” rating for the PB Fintech Ltd IPO.

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PB Fintech Ltd IPO: Key competitive strengths

Listing out PB Fintech Ltd's key competitive strengths, Choice broking said, "Strong, consumer-friendly brands offering wide choice, transparency and convenience. Proprietary technology, data and intelligence stack. Collaborative partner for insurer and lending partners. Business scale gives it unique self-reinforcing flywheels and strong network effects. High renewal rates providing clear visibility into future business and delivering superior economics. Benefits from economies of segmentation. Capital efficient model with low operating costs. Founders with clarity of purpose backed by experienced management."

PB Fintech Ltd IPO: Risk and concerns

Talking about risk and concerns of PB Fintech Ltd, Choice broking in its note said, "Unfavorable government policies and regulations. Withdrawal of products from business partners. Lower commission from business partners. Difficulty in acquiring and retaining customers. Declining operational efficiencies. Business seasonality and continued slowdown in credit growth. Competition from business partners."

PB Fintech Ltd IPO: Peer comparison and valuation

On peer comparison and valuation of PB Fintech, Choice broking adds in its note, "Macros of the insurance sector are positive and so are the fundamentals of PBFL. The company with its dominant position in the digital insurance and credit market, is expected to benefit from the abundant business opportunities in both the markets. At higher price band of Rs. 980, PBFL is demanding an EV/TTM Sales multiple of 40.5x, which seems to be very stretched. Considering the above observations we assign “Subscribe for Long Term” rating for the issue."

PB Fintech IPO

-Earlier, PB Fintech Ltd had garnered a little over Rs 2,569 crore from anchor investors ahead of its IPO.

-The company has decided to allocate 26,218,079 shares to 155 anchor investors at Rs 980 apiece, aggregating the transaction size to Rs 2,569.37 crore, according to a circular uploaded on BSE website.

-Goldman Sachs, Nomura, BlackRock Global Funds, Morgan Stanley, Canada Pension Plan Investment Board, Fidelity, Abu Dhabhi Investment Authority, ICICI Prudential Mutual Fund (MF), SBI MF, Axis MF and UTI MF are among the anchor investors that have been allocated shares.

-The Rs 5,710-crore IPO comprises a fresh issue of Rs 3,750 crore worth of equity shares and an offer for sale of about Rs 1,960 crore by existing shareholders.

-As part of the OFS, SVF Python II (Cayman) will sell shares worth Rs 1,875 crore, Yashish Dahiya will offload shares worth Rs 30 crore, Alok Bansal will divest shares worth Rs 12.75 crore, Shikha Dahiya will sell shares to the tune of Rs 12.25 crore and Rajendra Singh Kuhar will offload shares worth Rs 3.5 crore.

-In addition, Founder United Trust will sell around 2,67,500 shares and in upper band price it comes to around Rs 26.21 crore. The issue, with a price band of Rs 940-980 a share, will open for public subscription during November 1-3.

-Of the entire issue, 75 per cent will be reserved for qualified institutional buyers, 15 per cent for non-institutional investors and the remaining 10 per cent for retail investors.

-Proceeds of the fresh issue will be used towards enhancing visibility and awareness of the company's brands, to look for new opportunities to expand growth initiatives to increase the consumer base including offline presence.

-Also, the proceeds from the IPO will be used for funding strategic investments and acquisitions, expanding presence outside India and general corporate purpose.

PB Fintech

-PB Fintech is the leading online platform for insurance and lending products, leveraging the power of technology, data and innovation.

-It provide convenient access to insurance, credit and other financial products.

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