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PolicyBazaar IPO changes; EV financing on the rise
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Today, PolicyBazaar’s parent company becomes the third Indian tech startup to tap the public markets after Zomato and Nykaa. We’ve got all the details of its IPO, including news that the founders will sell far fewer shares than they had originally planned to.
Also in this letter:
Yashish Dahiya and Alok Bansal, the founders of PolicyBazaar’s parent comany PB Fintech, will sell significantly fewer shares than they planned to as part of the offer for sale (OFS) in its initial public offering, which opens today. Sources told us the founders have reduced their OFS by 85-90% by value.
Details: Dahiya owns 4.27% in PB Fintech while Bansal has 1.45%, according to the RHP.
Why? The increased interest in tech IPOs, the headroom for further growth in its business, and the company’s likely valuation after the IPO were behind the decision, the sources said. “They 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,” one of the sources told us.
IPO details: The IPO opens today and closes on Wednesday. Policybazaar has set a price band of Rs 940-980 a share. It is seeking to raise Rs 5,700 crore through the IPO, which will include a fresh issue of shares worth Rs 3,750 crore and an OFS of Rs 1,960 crore.
We reported last week that Policybazaar’s anchor investment slot been oversubscribed 40 times and that leading insurance firms had also picked up stakes. It raised Rs 2,569 from 155 anchor investors, including HDFC Life, ICICI Prudential, Bajaj Allianz Life, SBI General Insurance and Max Life Insurance.
The company said it will use the money it raises in the following way:
Electric two-wheeler brands such as Hero Electric, Ather Energy and Ola Electric are optimistic about being able to sell more vehicles under financing schemes in the coming months and years.
Why now? Government subsidies and rising fuel prices have provided a fillip to sales of high-quality and affordable electric vehicles (EVs).
Hero Electric said it expects the proportion of financed EVs to grow to 20% by the end of the fiscal year, from around 11% now. The company sold 6,289 units in September, narrowly beating Piaggio, which sells traditional fuel-powered scooters under the Aprilia brand.
Ola Electric, which is trying to position itself as the dominant player in India’s two-wheeler EV market with its S1 and S1 Pro electric scooters, has tied up with around 10 banks and non-banks.
Bengaluru-based Ather Energy expects the number of vehicles bought through financing to nearly double to around 45% over the next few years from around 20-25%, bringing it on par with the overall scooter market in the country.
Quote: “There is still a 25-percentage-point gap between the overall scooter market average (for vehicles being bought on finance) and our average,” said Ravneet Phokela, chief business officer at Ather Energy.
Indian IT services providers are on a roll. Not only are they grabbing market share from global peers, they are also winning customers in new technology areas as the pandemic has shaken off process-related inertia and sped up offshore delivery mechanisms.
Now, citing the buoyant demand environment, the country’s top IT companies have revised revenue guidance for the fiscal. They say they will end the year with double-digit growth rates and a three-year high demand forecast.
Pushed into digital transformation due to the pandemic, clients, too, have opened up their wallets to allow these IT firms to work on newer go-to-market strategies. Industry body Nasscom has said that the operating margins of Indian IT firms expanded to a seven-year high of 25% on average in the previous fiscal. This was down to cost savings from reduced travel, a favourable onshore-offshore mix due to a cutback in onsite roles, and lower attrition levels.
Yes, but: The way forward won’t be without some bottlenecks, such as the growing demand for IT services, a massive talent crunch, the drying up of mega deals, a gradual reopening of travel and work from offices.
In their words: “We are participating more and more in areas which relate to digital transformation, which relate to cloud work, which relate to data and analytics work,” said Salil Parekh, CEO of Infosys. “We see this across all industries, and we see that large enterprises are accelerating their spending.”
TCS said that its digital solutions have helped win more clients since the onset of the pandemic. “We continue to gain market share, benefiting from the flight to quality that we have seen over the last 18 months, as well as in structured vendor consolidation exercises,” CFO Samir Seksaria said during its recent results announcement.
DD Mishra, senior director at Gartner, said global IT services end-user spending will touch $1.2 trillion by the end of the year, of which Indian IT companies will contribute about 20%.
■ Quick commerce grocery delivery app Zepto has raised $60 million led by US investment fund Glade Brook Capital, at a post-money valuation of $225 million. Venture capital fund Nexus Venture Partners and Silicon Valley’s Y Combinator also participated in the funding round along with prominent angel investors including former chief business officer of WhatsApp, Neeraj Arora.
■ Neo-bank Fi, which offers digital bank accounts and financial guidance to working professionals, has raised $50 million in a new funding round led by Facebook cofounder Eduardo Saverin's B Capital, with participation from Falcon Edge Capital. This is its second funding round, valuing it at $315 million, a 7x jump. Fi had raised $13 million from Ribbit Capital and Sequoia Capital, in a seed round last year.
Dell Technologies India has reported two consecutive quarters of record growth this year and demand remains high in the country, Alok Ohrie, president and managing director, said. “Technology is playing an integral role in the global economic recovery, and we continue to see demand picking up in India,” he added.
What’s aiding the growth? Customers are focusing on building IT infrastructure that can help them maintain business continuity and transform workspaces, he said, adding that they are also using digital as they look for newer ways of reaching out and servicing their clients.
Financials: The US-based company reported revenues of $26.1 billion, up 15% in the second quarter of the ongoing fiscal year. Operating income was at $1.4 billion, up 21%.
“We are accelerating our push in the market with IT as a service and cloud infrastructure as a service, and our global project Apex, and this is giving us significant opportunities to engage with customers trying to transform their business on the digital front,” Ohrie said.
API Holdings, the parent entity of India’s largest e-pharmacy PharmEasy, is set to file a draft red herring prospectus in the next 7-10 days for a Rs 6,000-7,000 crore initial public offering, sources told over the weekend.
It is expected to involve a primary share sale only.
PharmEasy is likely to be a publicly traded firm before the end of the current financial year, joining a slew of top-tier startups buoyed by the record Rs 9,000-crore listing by Zomato in July. Nykaa launched its IPO last week and PolicyBazaar’s opens today. Logistics tech startup Delhivery is also in the final stages of filing its draft IPO papers next week.
This has proven to be a record year for startups with unprecedented capital inflow to the sector. Paytm’s Rs 18,300 crore IPO is set to be the biggest ever in Indian corporate history. According to an IVCA-Preqin report, venture capital investment in Indian startups in 2021 was at a record high of $26 billion as of October 7.
Indian investment in cryptocurrency hits $10 billion this week: The crypto party just got bigger this week, as Indian crypto exchanges recorded their biggest investment levels ever, not only in terms of the number of investors, but also in the sums invested.
India driving the technology cart at retailer Lowe’s: For Lowe’s, early 2020 was a period when it had to modernise and update processes as well as deal with a sudden increase in demand, as customers — stuck at home due to the Covid-19 pandemic — started spending on home improvement projects. From creating contactless capabilities to developing cloud-based architecture, India software centre has led several cutting-edge transformations.
Also in this letter:
- Electric two-wheeler firms bullish about financing schemes
- As demand soars, Indian IT firms move into high gear
- Dell expects demand to remain high in India
PolicyBazaar IPO: founders to cut sale of own shares by 85-90%
Yashish Dahiya and Alok Bansal, the founders of PolicyBazaar’s parent comany PB Fintech, will sell significantly fewer shares than they planned to as part of the offer for sale (OFS) in its initial public offering, which opens today. Sources told us the founders have reduced their OFS by 85-90% by value.
Details: Dahiya owns 4.27% in PB Fintech while Bansal has 1.45%, according to the RHP.
- Dahiya was supposed to sell his shares worth Rs 250 crore in the IPO. He will now sell shares worth Rs 30 crore, according to the company’s red herring prospectus.
- Bansal, who planned to sell shares worth of Rs 95 crore, will now sell shares worth just under Rs 13 crore.
- SoftBank, the largest shareholder with over 15% in the firm, will sell shares worth Rs 1,875 crore.
Why? The increased interest in tech IPOs, the headroom for further growth in its business, and the company’s likely valuation after the IPO were behind the decision, the sources said. “They 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,” one of the sources told us.
IPO details: The IPO opens today and closes on Wednesday. Policybazaar has set a price band of Rs 940-980 a share. It is seeking to raise Rs 5,700 crore through the IPO, which will include a fresh issue of shares worth Rs 3,750 crore and an OFS of Rs 1,960 crore.
We reported last week that Policybazaar’s anchor investment slot been oversubscribed 40 times and that leading insurance firms had also picked up stakes. It raised Rs 2,569 from 155 anchor investors, including HDFC Life, ICICI Prudential, Bajaj Allianz Life, SBI General Insurance and Max Life Insurance.
The company said it will use the money it raises in the following way:
- Rs 1,500 crore to enhance the visibility and awareness of its brands Policybazaar and Paisabazaar
- Rs 375 crore on new opportunities to expand its consumer base
- Rs 600 crore on strategic investments and acquisitions
- Rs 375 crore to expand its presence outside India and besides general corporate purposes
Electric two-wheeler firms bullish about financing schemes
Electric two-wheeler brands such as Hero Electric, Ather Energy and Ola Electric are optimistic about being able to sell more vehicles under financing schemes in the coming months and years.
Why now? Government subsidies and rising fuel prices have provided a fillip to sales of high-quality and affordable electric vehicles (EVs).
Hero Electric said it expects the proportion of financed EVs to grow to 20% by the end of the fiscal year, from around 11% now. The company sold 6,289 units in September, narrowly beating Piaggio, which sells traditional fuel-powered scooters under the Aprilia brand.
Ola Electric, which is trying to position itself as the dominant player in India’s two-wheeler EV market with its S1 and S1 Pro electric scooters, has tied up with around 10 banks and non-banks.
Bengaluru-based Ather Energy expects the number of vehicles bought through financing to nearly double to around 45% over the next few years from around 20-25%, bringing it on par with the overall scooter market in the country.
Quote: “There is still a 25-percentage-point gap between the overall scooter market average (for vehicles being bought on finance) and our average,” said Ravneet Phokela, chief business officer at Ather Energy.
Tweet of the day
As demand soars, Indian IT firms move into high gear
Indian IT services providers are on a roll. Not only are they grabbing market share from global peers, they are also winning customers in new technology areas as the pandemic has shaken off process-related inertia and sped up offshore delivery mechanisms.
Now, citing the buoyant demand environment, the country’s top IT companies have revised revenue guidance for the fiscal. They say they will end the year with double-digit growth rates and a three-year high demand forecast.
Pushed into digital transformation due to the pandemic, clients, too, have opened up their wallets to allow these IT firms to work on newer go-to-market strategies. Industry body Nasscom has said that the operating margins of Indian IT firms expanded to a seven-year high of 25% on average in the previous fiscal. This was down to cost savings from reduced travel, a favourable onshore-offshore mix due to a cutback in onsite roles, and lower attrition levels.
Yes, but: The way forward won’t be without some bottlenecks, such as the growing demand for IT services, a massive talent crunch, the drying up of mega deals, a gradual reopening of travel and work from offices.
In their words: “We are participating more and more in areas which relate to digital transformation, which relate to cloud work, which relate to data and analytics work,” said Salil Parekh, CEO of Infosys. “We see this across all industries, and we see that large enterprises are accelerating their spending.”
TCS said that its digital solutions have helped win more clients since the onset of the pandemic. “We continue to gain market share, benefiting from the flight to quality that we have seen over the last 18 months, as well as in structured vendor consolidation exercises,” CFO Samir Seksaria said during its recent results announcement.
DD Mishra, senior director at Gartner, said global IT services end-user spending will touch $1.2 trillion by the end of the year, of which Indian IT companies will contribute about 20%.
ETtech Done Deals
■ Quick commerce grocery delivery app Zepto has raised $60 million led by US investment fund Glade Brook Capital, at a post-money valuation of $225 million. Venture capital fund Nexus Venture Partners and Silicon Valley’s Y Combinator also participated in the funding round along with prominent angel investors including former chief business officer of WhatsApp, Neeraj Arora.
■ Neo-bank Fi, which offers digital bank accounts and financial guidance to working professionals, has raised $50 million in a new funding round led by Facebook cofounder Eduardo Saverin's B Capital, with participation from Falcon Edge Capital. This is its second funding round, valuing it at $315 million, a 7x jump. Fi had raised $13 million from Ribbit Capital and Sequoia Capital, in a seed round last year.
Dell expects demand to remain high in India
Dell Technologies India has reported two consecutive quarters of record growth this year and demand remains high in the country, Alok Ohrie, president and managing director, said. “Technology is playing an integral role in the global economic recovery, and we continue to see demand picking up in India,” he added.
What’s aiding the growth? Customers are focusing on building IT infrastructure that can help them maintain business continuity and transform workspaces, he said, adding that they are also using digital as they look for newer ways of reaching out and servicing their clients.
Financials: The US-based company reported revenues of $26.1 billion, up 15% in the second quarter of the ongoing fiscal year. Operating income was at $1.4 billion, up 21%.
“We are accelerating our push in the market with IT as a service and cloud infrastructure as a service, and our global project Apex, and this is giving us significant opportunities to engage with customers trying to transform their business on the digital front,” Ohrie said.
PharmEasy parent to file draft IPO papers soon
API Holdings, the parent entity of India’s largest e-pharmacy PharmEasy, is set to file a draft red herring prospectus in the next 7-10 days for a Rs 6,000-7,000 crore initial public offering, sources told over the weekend.
It is expected to involve a primary share sale only.
PharmEasy is likely to be a publicly traded firm before the end of the current financial year, joining a slew of top-tier startups buoyed by the record Rs 9,000-crore listing by Zomato in July. Nykaa launched its IPO last week and PolicyBazaar’s opens today. Logistics tech startup Delhivery is also in the final stages of filing its draft IPO papers next week.
This has proven to be a record year for startups with unprecedented capital inflow to the sector. Paytm’s Rs 18,300 crore IPO is set to be the biggest ever in Indian corporate history. According to an IVCA-Preqin report, venture capital investment in Indian startups in 2021 was at a record high of $26 billion as of October 7.
Other Top Stories By Our Reporters
Indian investment in cryptocurrency hits $10 billion this week: The crypto party just got bigger this week, as Indian crypto exchanges recorded their biggest investment levels ever, not only in terms of the number of investors, but also in the sums invested.
India driving the technology cart at retailer Lowe’s: For Lowe’s, early 2020 was a period when it had to modernise and update processes as well as deal with a sudden increase in demand, as customers — stuck at home due to the Covid-19 pandemic — started spending on home improvement projects. From creating contactless capabilities to developing cloud-based architecture, India software centre has led several cutting-edge transformations.
Global Picks We Are Reading
- Facebook’s Meta mission was laid out in a 2018 paper declaring ‘The Metaverse is ours to lose’ (CNBC)
- The metaverse is Mark Zuckerberg’s escape hatch (NYT)
- GameStop ousts COO seven months after hiring her from Amazon (Bloomberg)
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