Business
SoftBank buys more stake in PolicyBazaar in $130 million deal
BENGALURU: SoftBank Vision Fund has picked up an additional stake for $130 million in EtechAces Marketing and Consulting, which owns online financial services portals PolicyBazaar and PaisaBazaar, according to three sources familiar with the development. The new investment will give it an over 15% stake in the company and value it at about $1.5 billion, according to these sources.
The investment is a mix of primary infusion of capital into the company at about $50 million, which was agreed upon earlier, and purchase of shares worth another $80 million. The shares have been bought from existing investors like Tiger Global Management, Ribbit Capital and Inventus Capital India, said one of the sources briefed on the matter.
“SoftBank has bought the secondary shares at a premium to the valuation at which they did the primary at $1 billion in 2018,” said this source, adding that with this the total investment by SoftBank in the company stands at about $200 million.
Spokespersons for PolicyBazaar and SoftBank declined to comment when contacted by TOI on the matter.
The development signals SoftBank’s continued bullishness on some of its India portfolio companies even as it is plagued by losses related to investments like WeWork and Uber. These have taken a further hit due to the Covid-19 pandemic.
SoftBank Vision Fund CEO Rajeev Misra had told TOI in April that it sees potential consolidation and bargain deals in the Indian internet space, and is looking at investments in new areas like education technology, online pharmacy, and software services.
The stake purchase comes after the department for promotion of industry and internal trade (DPIIT) notified an amendment to the foreign direct investment (FDI) policy in February. Allowing 100% FDI in insurance intermediaries, the policy was initially announced by finance minister Niramala Sitharaman in her Budget speech in July 2019.
Till now, FDI in companies like PolicyBazaar had been capped at 49%, which had left it to rely on registered domestic investors like PremjiInvest and Info Edge to buy more stake to continue meeting the norms.
Paisabazaar, which focuses on the lending segment, had laid off about 1,500 employees — around half of its workforce — last month as the business had been hit. But sources said that the insurance business under PolicyBazaar has been doing well.
“PolicyBazaar will make up more than the business downside at Paisabazaar, which is a temporary blip, and economy cannot run without loans. PolicyBazaar got a major boost as offline agents were not active and people have increasingly realised the importance of health and life insurance,” said one of the sources mentioned earlier.
The investment is a mix of primary infusion of capital into the company at about $50 million, which was agreed upon earlier, and purchase of shares worth another $80 million. The shares have been bought from existing investors like Tiger Global Management, Ribbit Capital and Inventus Capital India, said one of the sources briefed on the matter.
“SoftBank has bought the secondary shares at a premium to the valuation at which they did the primary at $1 billion in 2018,” said this source, adding that with this the total investment by SoftBank in the company stands at about $200 million.
Spokespersons for PolicyBazaar and SoftBank declined to comment when contacted by TOI on the matter.
The development signals SoftBank’s continued bullishness on some of its India portfolio companies even as it is plagued by losses related to investments like WeWork and Uber. These have taken a further hit due to the Covid-19 pandemic.
SoftBank Vision Fund CEO Rajeev Misra had told TOI in April that it sees potential consolidation and bargain deals in the Indian internet space, and is looking at investments in new areas like education technology, online pharmacy, and software services.
The stake purchase comes after the department for promotion of industry and internal trade (DPIIT) notified an amendment to the foreign direct investment (FDI) policy in February. Allowing 100% FDI in insurance intermediaries, the policy was initially announced by finance minister Niramala Sitharaman in her Budget speech in July 2019.
Till now, FDI in companies like PolicyBazaar had been capped at 49%, which had left it to rely on registered domestic investors like PremjiInvest and Info Edge to buy more stake to continue meeting the norms.
Paisabazaar, which focuses on the lending segment, had laid off about 1,500 employees — around half of its workforce — last month as the business had been hit. But sources said that the insurance business under PolicyBazaar has been doing well.
“PolicyBazaar will make up more than the business downside at Paisabazaar, which is a temporary blip, and economy cannot run without loans. PolicyBazaar got a major boost as offline agents were not active and people have increasingly realised the importance of health and life insurance,” said one of the sources mentioned earlier.
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