PB Fintech Ltd., the parent company of insurance brokerage firm Policybazar, has revealed plans to invest Rs 696 crore in its subsidiary PB Healthcare Services in the upcoming financial year to bolster its business enterprise. This strategic decision emerged from a board meeting at PB Fintech. A regulatory filing indicates that PB Fintech is expected to hold up to 33.63% equity on a fully diluted basis.
Yashish Dahiya, the Chairman and Group CEO of PB Fintech, discussed the company’s future initiatives, suggesting that the eventual owner of the healthcare project might be an entity possessing extensive knowledge of the healthcare sector, aiming for long-term involvement. He noted that at least two investors associated with the project share a global perspective on healthcare systems, understand the operating model thoroughly, and are dedicated to its sustained advancement.
The parent company of Policybazar is making substantial investments in PB Healthcare to address the conflicts emerging between hospitals and insurance companies, which often impact policyholders during the claims process. Insurance companies routinely validate claims to identify any unnecessary treatments or misreporting by customers, leading to potential delays in claim settlements largely due to trust issues. PB Fintech is proposing a system where hospitals adhere to standardized protocols agreed upon with insurance companies, ensuring smoother claims processes and enhancing customer trust.
Dahiya explains the concept inspired by Health Maintenance Organizations (HMOs), aiming to streamline hospital visits by eliminating the pre- and post-hospitalization processes, attributed to this trust-based system. The idea of a family doctor advising patients on necessary care levels, reminiscent of older healthcare practices, is central to this initiative.
PB Fintech has allocated around $80 million initially for this investment, separating PB Health and PB Fintech as distinct entities. While PB Fintech functions as an incubator and catalyst for the idea, it does not intend to be the predominant shareholder long-term. Instead, PB Health will operate independently, leveraging additional funds it generates. Though PB Fintech holds a 30% equity, it remains uninvolved in further financing responsibilities, anticipating that other, more experienced healthcare investors will lead further advancements.
All investors, including PB Fintech, come in at the same valuation without any preference or differential value, highlighting their different roles in the enterprise. Dahiya and Alok, affiliated personally with the venture, maintain limited personal holdings.
It is emphasized that the valuation for PB Healthcare is based solely on cash value, with no premium for brand or concept. PB Fintech maintains that the success of their investment hinges on excellent customer experiences, superior consumer outcomes, potential reduction in insurance costs, and the venture eventually turning profitable. While profitability is not an immediate priority, ensuring a great customer experience remains paramount for PB Fintech’s investment objectives.
