PB Fintech, which operates online insurance platform Policybazaar and credit comparison portal Paisabazaar, initial public offering (IPO) will open for subscription today. The three-day share sale’s fixed a price band of ₹940-980 and the issue will conclude on November 3. The company on Friday said it garnered a little over ₹2,569 crore from anchor investors ahead of its IPO.
The ₹5,710-crore IPO comprises a fresh issue of ₹3,750 crore worth of equity shares and an offer for sale of about ₹1,960 crore by existing shareholders. PB Fintech is the leading online platform for insurance and lending products, offering access to insurance, credit and other financial products.
As per market observers, Policybazaar shares were available at a premium of 170 in the grey market. The company is planning to list on leading stock exchanges NSE and BSE on 15 November.
“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,” said Choice Broking.
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.
“While the Insurance brokers license and the minimal online insurance penetration in India provide the company massive long term opportunities to grow, the current valuation seems pretty expensive. Hence, only investors with a longer time horizon, a larger risk tolerance and the patience to wait for the company’s return ratios to improve should subscribe,” said Yesha Shah, Head of Equity Research, Samco Securities.
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.
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