Two persons aware of the development said the Gurgaon-based company has earmarked about Rs 500 crore to finance buyouts and other strategic initiatives, and has zeroed in on the reinsurance space, as it looks to expand its portfolio of products and services.
ET was unable to ascertain the name of the company PolicyBazaar has held talks with. The company’s spokespersons declined to comment.
India’s reinsurance sector, estimated at Rs 17,000-18,000 crore, has a relatively small pool of players, but which also include Berkshire Hathaway-backed General Re, Munich Re, Scor and Swiss Re, apart from local players, such as ITI Reinsurance and state-owned GIC Re.
Reinsurance, also known as insurance for insurers or stop-loss insurance, is defined as the practice of insurers transferring portions of risk portfolios to other parties by some form of agreement to reduce the likelihood of paying a large obligation resulting from an insurance claim.
The expansion of PolicyBazaar’s portfolio of products and services comes at a time when the company, which is backed by the likes of Tiger Global Management, PremjiInvest–the personal investment arm of Wipro chairman Azim Premji– and Temasek, is believed to be in the midst of negotiations with SoftBank for its next round of funding.
The development, first reported by Bloomberg, could see the Tokyo-based investor pump in an estimated $500 million (Rs 3,246.25 crore) into the company, at a potential valuation of $800 million (Rs 5,198.32 crore) and upwards, and which is likely to have a secondary sale of shares.
The company had last raised funds in October last year–which valued it at about $500 million —in an investment round led by global asset management firm Wellington Management, private equity firm True North and IDG Ventures India. Till date, PolicyBazaar has raised about Rs 1,000 crore in equity financing.
SoftBank has also been in widely-reported discussions with Zurich-based Swiss Re for a potential $10 billion-plus investment, which could see it pick up 20%-30% stake in the reinsurance major, and in the process become its anchor shareholder.
PolicyBazaar, too, has been branching out to other segments. Earlier this month, ET was the first to report that the company had entered the healthcare technology and services segment, which is likely to see it compete directly with the likes of Tencent-backed Practo and Sequoia Capital-backed 1mg Technologies.
The company has set aside about $100 million (Rs 649.80 crore) towards the new venture, according to its chief executive, Yashish Dahiya.
“Indian healthcare system has a $100 billion out-of-pocket expense market, one that is not covered by health insurance. This market is expected to grow to $200 billion by fiscal 2020. We will enter into tie-ups with hospitals, and have PolicyBazaar advisors there to help consumers at the moment of truth — which is claims,” Dahiya had told ET.
The company, which has also been mulling an initial public offering, swung to a net profit of Rs 12.9 crore for fiscal 2017, on revenue of Rs 213 crore, according to documents sourced from business intelligence platform Tofler.