PE-backed Policybazaar, Nykaa file for India IPOs

PolicyBazaar is looking to raise INR60.2 billion ($812 million), including INR37.5 billion and INR22.7 billion in new and secondary shares respectively. According to a prospectus, the only institutional selling shareholder is SoftBank Vision Fund-controlled entity that currently holds about 9.4%. Vision Fund has an approximately 16.8% position across two units.

Nykaa is targeting about INR5.2 billion from the sale of new shares, while existing investors are offering about 43.1 million shares for sale. The expectation is it will raise INR35-40 billion overall. TPG Capital and Lighthouse Partners are the largest selling shareholders, according to a prospectus. They hold approximately 3.5% and 3.1% pre-offer.

It extends a string of sizeable tech-enabled start-up listings in India as public market appetite for the risk profile firms up following regulatory changes providing pre-profit companies a path to IPO. It is driven by a better understanding of business models and a desire to participate in a global technology boom that has been accentuated by COVID-19 enforced changes in consumption habits.

The standout to date is food delivery platform Zomato, whose INR93.7 billion IPO was India’s fifth-largest PE-backed offering. Other companies that have filed in recent weeks include digital payment players Paytm and Mobikwik. Other high-profile companies such as Delhivery, Ola, and Flipkart are positioned to follow suit. This activity has also fueled a boom in pre-IPO funding and fundraising.

PolicyBazaar’s core offering is a platform that allows individuals to compare competing bids for financial products. The company is best known for its general and life insurance marketplace, though it also provides quotes for consumer lending and credit through companion site Paisabazaar. It has more than 100 million visitors a day and facilitates around 400,000 transactions a month.

Revenue came to INR8.9 billion in the 2021 financial year, up from INR7.7 billion 12 months earlier. During the same period, the net loss narrowed from INR3 billion to INR1.5 billion. The company cited a significant reduction in business for Paisabazaar due to COVID-19 lockdowns and other restrictions, as well as decreased demand for travel and other insurance products.

Last year, Vision Fund acquired a 15% stake in Policybazaar in a deal that valued the company at around $1.5 billion. It invested $130 million, including $50 million in primary capital and $80 million for shares sold by existing investors Tiger Global Management, Ribbit Capital, and Inventus Capital India.

Vision Fund also led the $200 million round in 2018 that established PolicyBazaar’s unicorn status. The company has raised more than $600 million since 2011, when Intel Capital became one of its first institutional investors.

Tencent Holdings, Tiger Global, and Temasek Holdings hold about 9.2%, 7.8% and 6.3% respectively. True North confirmed a partial exit to various investors including private equity players in April, leaving it with a 2.3% position as of the IPO filing.

Nykaa runs an e-commerce platform selling cosmetic, haircare, fragrance, and wellness products as well as appliances. It also operates a 73-store network present mostly in malls in more than 38 cities. In 2019, it acquired 20Dresses, an online retailer of clothes, footwear, and handbags for women.

The company has raised about $62 million in private equity and venture capital funding. Steadview Capital became the largest institutional shareholder last year when it led an INR1 billion round and took an approximately 3.5% stake. Previous investors include JM Financial, ABG Capital, Techpro Ventures, and TVS Capital Funds.

Footfall across the brick-and-mortar footprint fell 55-60% during the 2021 financial year. However, revenue is largely generated online and improved from INR17.7 billion in 2020 to INR24.4 billion in 2021. Nykaa is also one of the few internet start-ups in the recent IPO wave to be profitable, having flipped from a loss of INR162.3 million in 2020 to an INR597.6 million profit in 2021.

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• Topics
• South Asia
• Financials
• Technology
• Consumer
• Exits
• IPO
• India
• Softbank
• TPG Capital
• Financial Services
• e-commerce
• insurance