Indian digital insurance marketplace Policybazaar is looking to raise USD 50-100 million from Alpha Wave Incubation (AWI), a recently launched VC fund by ADQ, the state-owned holding company for Abu Dhabi’s non-oil sectors, and managed by New York-based investment firm Falcon Edge Capital.
The new round is expected to be a mix of primary and secondary capital and will take the valuation of ETechAces Marketing and Consulting—the parent of Policybazaar— to over USD 2 billion, up from about USD 1.5 billion at present, local media Economic Times (ET) said citing sources.
The move is in line with the Gurugram-based unicorn’s plans to go for the initial public offering next year. In an interview with Bloomberg in July, Yashish Dahiya, co-founder and group CEO, Policybazaar, said the startup would raise about USD 250 million in a new financing round at a valuation of USD 2 billion before going public in September 2021.
While Policybazaar is still working on closing its primary funding round, some of its existing backers have finalized the share sale.
For instance, AWI has already secured Policybazaar’s shares worth USD 20 million from its existing private equity backer True North, which earlier held a total of 5.79% stake in the company through its two funds, the report said.
“Falcon Edge has bought stakes from some existing investors and is in the process of being issued fresh equity in the company,” the ET report added citing a source familiar with the development.
In July, SoftBank had reportedly bought additional shares of EtechAces Marketing and Consulting for USD 130 million from other existing backers including Tiger Global, Ribbit Capital, and Inventus Capital, which gave it over 15% stake in the company at a valuation of about USD 1.5 billion.
In August, local media reports said Google was also looking to acquire about a 10% stake in Policybazaar with the investment of USD 150 million. However, the deal hasn’t yet materialized.
As Policybazaar prepares to list on the public market, many late-stage investors are likely to join the 12-year-old firm’s cap table. The company claims to have one million transactions a month across life, health, auto, and investment-linked insurance products and is reportedly on track to clock USD 135 million in revenues for the financial year ending March 2021.
Although Policybazaar turned profitable in 2017, for the last two years, it slid back to making losses. However, the company expects to become profitable again this fiscal year due to the spike in demand for insurance products due to the healthcare pandemic.
Other insurance tech startups are also riding a buoyant wave as more investors are now looking to benefit from the increasing adoption of online insurance products. For instance, earlier this month, California-headquartered GGV Capital led a USD 30 million round in Mumbai-based insurance tech startup Turtlemint, while Sequoia’s Surge Ventures wrote a USD 4 million check for health insurance startup Plum Insurance.
According to a recent report by India Brand Equity Foundation, the insurance industry in India is expected to reach USD 280 billion by 2020. Of the total, the online insurance market is worth USD 3 billion, where Policybazaar is a clear category leader.
Policybazaar is also one of the few unicorns that are looking to get listed over the next few years. The other companies that are reportedly eyeing initial public offering include food tech giant Zomato, Walmart-owned homegrown e-tailer Flipkart, cloud-based customer service software firm Freshworks.