PB Fintech’s Healthcare Arm to Raise INR 1,461 Cr in First Seed Round

PolicyBazaar's parent company, PB Fintech, is making big moves into the healthcare sector. In fact, the firm has just announced that it's set to make a whole suite of healthcare services available to Indians. It even has a new subsidiary to handle the job, PB Healthcare Services Pvt Ltd. The new arm is starting with a fresh round of funding, seed funding, to be precise, to the tune of INR 1,461.60 crore. That's up 76% from an earlier, not-quite-as-finished-to-say-funding-story dropped back in March.

This shift is the initial large influx of cash for the healthcare startup since its formation just 11 months ago. Although the operation has been secretive about its precise objectives, it has made clear that its endgame is a sort of uninterrupted experience for those it insures, similar to the preventive medical insurance experience one might have in the United States.

Equity Dilution Reflects Strategic Shift

Through the enlarged financing round, PB Fintech's shareholding in the healthcare subsidiary will fall sharply from 100% to 32.14% on a fully diluted basis. This change also accommodates the creation of an employee stock option pool. In earlier remarks, CEO Yashish Dahiya made it clear that PB Fintech was not adopting a long-term ownership model in this initiative. Instead, the firm aims to be an incubator for the healthcare venture, so that it can evolve independently after PB Fintech steps back.

Dahiya and other key stakeholders, including cofounder Alok Bansal and senior executives, are investing INR 132.75 crore to obtain a total of 6.61% equity in PB Healthcare. This commitment from key figures in the organization certainly seems to bode well for the long-term outlook of the venture.

A Potential Game Changer by Year-End

The company projects that PB Healthcare will start up by December 2025. If it works, the model might change the game for insurance-linked healthcare in India. Its targets, eliminating pre-authorization, ironing out the claim experience, add up to a user-friendly alternative for insurance-linked healthcare in India.

Even so, expectations have been dampened somewhat by CEO Dahiya, who has indicated it may take at least four years to assess the actual impact of the business on the broader healthcare ecosystem.

Skepticism from Analysts

The optimism surrounding PB Fintech isn't shared by everyone. Bernstein, a prominent brokerage firm, had previously expressed concerns about the company diversifying into healthcare. According to Bernstein, PB Fintech's foray into such a heavily infrastructure-dependent sector is a departure from the asset-light model that had long defined it. Bernstein suggests that the move could have significant pros and cons.

More insights should come when PB Fintech shares its Q4 FY25 numbers. Markets seem cautiously optimistic in the meantime, with the company’s stock closing just above where it had Standard & Poor’s global rating on it and just below where it had a Morgan Stanley global rating on it.