InsuranceDekho, RenewBuy near merger to create India's No. 2 insurance aggregator

InsuranceDekho, backed by TVS Capital Funds and Investcorp, is in advanced talks to merge with smaller peer RenewBuy in a cash-and-stock deal, according to two people familiar with the matter, in a transaction that will create India’s second-largest insurance aggregator.

The deal will create India’s largest insurance marketplace by value after PolicyBazaar, which went public in 2021, the people cited above said, asking to remain anonymous.

Also read | InsuranceDekho debuts SaaS solutions firm Heph for insurance distributors

“The combined entity will be valued at over ₹8,000 crore and is expected to raise another round of funding before it considers a public listing," one of the people cited above said. “The term sheets have been issued," the second person said, adding that the final deal contours are still being discussed.

The potential deal is set to value RenewBuy at approximately ₹3,000 crore and InsuranceDekho at a little over ₹5000 crore. “Some of the early investors of Renewbuy are expected to sell some of their stakes," the person said.

InsuranceDekho and Renewbuy did not immediately respond to Mint's queries.

Fifth largest life insurance market

India is the world's fifth largest life insurance market that is expected to reach $222 billion by 2026, growing at a rate of 32-34% each year, according to International Brand Equity Foundation estimates.

In June, Mint exclusively reported that InsuranceDekho was in early talks to raise $150 million in a mix of primary and secondary transactions and had appointed Avendus to facilitate the process. This fundraise will now happen in the merged entity, the people cited above added.

Also read | InsuranceDekho appoints Avendus to help raise around $150 mn

The development comes about a year after InsuranceDekho raised $60 million in its Series B round at a valuation of $630 million. The funding was led by Japan’s Mitsubishi UFJ Financial Group (MUFG), BNP Paribas Cardif through its insurtech fund managed by European investment major Eurazeo, Beams Fintech Fund and Yogesh Mahansaria Family Office.

The company has utilised some of these proceeds to fund this acquisition, one of the people cited above said. At the time, InsuranceDekho also outlined plans to beef up tech capabilities, enhance marketing efforts and finance new initiatives like reinsurance.

InsuranceDekho also raised $150 million in its Series A round led by Goldman Sachs Asset Management and TVS Capital Funds in February last year. Some of its other existing investors include Investcorp, Avataar Ventures and LeapFrog Investments.

Premium from tier-II

Founded in 2017 by Ankit Agrawal and Ish Babbar, InsuranceDekho earns about 82% of its premium from tier-II cities and beyond. With more than 6 million customers, the company has direct integration with 46 insurance companies in India, offering over 380 products, including 175 health and life plans, and claims to be present in about 1,500 towns. It competes with the likes of Acko, Turtlemint and PolicyBazaar.

Also read | Insurtech startup InsuranceDekho acquires Verak, says CEO Ankit Agrawal

InsuranceDekho’s Jaipur-based parent CarDekho, which pivoted from selling used vehicles to auto financing, turned a unicorn in 2021. It competes with CarTrade, Spinny, and Cars24. In December 2023, CarDekho acquired shared mobility startup Revv.

In FY23, InsuranceDekho doubled its revenues to ₹100.3 crore from a year earlier and reduced its losses to ₹51.6 crore from ₹72.3 crore in the previous fiscal, according to Tracxn data.

RenewBuy reported net sales of ₹131.28 crore in FY23, with losses of ₹74.5 crore, according to data from VCCEdge.

Both the companies have not reported FY24 financials yet.