PB Fintech founders to reduce stake in firm via $140 million block deal

PB Fintech (parent company of Policybazaar and Paisabazaar) co-founders Yashish Dahiya and Alok Bansal will be selling shares worth 2.4 percent of the company's capital base cumulatively in a block deal worth $130 to 140 million (over Rs 1,000 cr).

The block deal will be done at a 0-2 percent discount to PB Fintech's closing price on January 10 which was at Rs 868.10 per share. Dahiya will be selling up to 70 lakh shares and Bansal will sell 38.9 lakh shares, the sources added.

The founders' cumulative stake will reduce to 8.01 percent on a fully diluted basis from 10.33 percent before the deal. The deal is likely to be executed on February 11.

The co-founders, along with Dahiya's wife Shika Dahiya and a few other shareholders had reduced the quantum of their stake sale in the run-up to the company's IPO in November 2021.

India will see the highest new demat account openings ahead of LIC IPO, says Zerodha's Nithin Kamath

"This proceeds from the sale are likely to be used by the founders to make tax payments towards the ESOPs that are due," said one of the above-mentioned sources.

According to data on the Bombay Stock Exchange (BSE) website, Dahiya currently holds 3.84 percent stake in the company, while Bansal holds 1.30 percent. 43.56 percent of Dahiya's total shares are locked-in as per the IPO lock up period, while none of Bansal's shares are under lock-in.

Post the listing, CEO Yashish Dahiya said on the rationale behind reducing the stake ahead of the IPO, "A large part of our shareholding is in the form of employee stock ownership plan (ESOP) and every time the ESOPs come due, there is a tax due on them at 43 percent and that tax has to be paid in advance of us selling our shares. There can be some challenges around that. And for that we need money."

However, analysts and industry experts believe that founders reducing stake raises concerns of an impact on investor sentiment.

Shriram Subramanian, Founder and Managing Director of corporate governance advisory firm InGovern Research Services said, "Any founder or promoter selling stake is a negative. But yes they may want to use the proceeds for tax repayments or personal investments. Alternatively, they could have pledged their shares and raised funds to pay off the taxes."

The company's shares had listed at Rs 1,150, a premium of nearly 23 percent over its issue price. The stock is down 34 percent currently from the date of its listing.