Gurugram-based insurance broker InsuranceDekho is in talks to acquire its smaller rival RenewBuy in a largely share-swap deal marking a major consolidation event in the insurance distribution sector, said three people in the know.
While RenewBuy will be valued at around $350 million, InsuranceDekho’s valuation is being pegged at $600 million, giving the merged entity a combined value of nearly $1 billion, one of the persons added.
Through the merger, investors in RenewBuy will receive shares in InsuranceDekho proportionate to the valuation of both the companies, said the second person aware of the talks.
RenewBuy counts Japanese insurance giant Dai-ichi Life Holdings, private equity fund Apis Growth, Lok Capital, IIFL Asset Management Company, among others as its investors. Till date, it has raised $141 million, as per Tracxn. Some of the early backers and angels may sell shares and exit the company, another person said.
“The exact contours of the deal are still being worked on, but some of the early investors of RenewBuy may get a complete or a part-exit through the secondary sale of shares..,” another person privy to the deal details said. In a secondary share sale, the proceeds of the transaction go to the existing investors and not to the company.
Email queries to RenewBuy and InsuranceDekho went unanswered till press time Sunday.
“The agent network of both the companies will be brought together post the completion of the deal, thereby undertaking a major consolidation in the insurance distribution business,” said the third person in the know. The person added that Balachander Sekhar, chief executive officer of RenewBuy, will join InsuranceDekho chief executive officer Ankit Agrawal to lead the merged entity.
“Whether the two entities continue to operate as independent businesses or they get merged into one brand will be decided subsequently. The deal will need to get a nod from the Insurance Regulatory and Development Authority (Irdai),” said the third person quoted above.
The development comes at a time there has been heightened competition between the likes of PB Partners, which is part of listed insurance major Policybazaar, InsuranceDekho, which was hived off from used car platform CarDekho, Nexus Venture Partners-backed Turtlemint and RenewBuy.
Agrawal of InsuranceDekho had told ET in October 2023 that he was scouting for inorganic growth opportunities and was expecting to close some acquisitions. The company had said then that it had around 1.1 lakh field agents and was looking to double it in the next 12 months. Data from Tracxn shows that InsuranceDekho posted a net revenue of Rs 100 crore in the financial year 2023 and a net loss of Rs 51.6 crore. Till date InsuranceDekho has raised $310 million in equity funding and counts Mitsubishi UFJ Financial Group, TVS Capital, Goldman Sachs Asset Management as its major investors.
All of these insurance selling platforms operate in the point- of sales-persons (PoSP) business, where brokers appoint their own agents who sell products like health, life, motor, term insurance to customers across the country.
“The acquisition makes sense for InsuranceDekho since it will get a major boost in terms of its physical network of agents and help create a very strong player in this area, especially given that the well-capitalised PolicyBazaar is aggressively chasing market share,” said the third person ET spoke to.
Source: Economic Times