Policybazaar, an Indian digital insurance marketplace backed by Softbank, Tencent and Tiger Global Management, announced that it will go public next year at a $3.5 billion valuation. The size of the IPO will be about $500 million.

Why should we care?
Investors are bullish on marketplace models for financial services because they simplify the complicated game of customer acquisition. They also function well in a context where insurance agents can’t easily sell their wares during a pandemic. In India, Policybazaar and rival Coverfox seek to innovate on a legacy market made up of state- and bank-backed insurers. With a large population of uninsured and underinsured people, there is certainly room for growth. Policybazaar faces the challenge of returning to profitability, but the company expects to surmount that obstacle thanks to growing interest in health and life insurance during the pandemic. It’s yet to be seen whether a Policybazaar IPO will be a harbinger of other big tech IPOs from India, including payments giant Paytm.