Paytm eyes to acquire Coverfox for about $100-120 Mn in all cash deal

Paytm has reportedly been in talks with digital insurance marketplace Coverfox for all-cash deal. While the talks are still in the early phase and far from being materialised, in case it goes through - Paytm would be shelling out $100-120 million cash for the transaction.

This would be the largest acquisition deal for the SoftBank-backed firm. With over 30 insurers including Life Insurance Corporation, Paytm had claimed the largest online insurance premium payments platform.

Besides Paytm Money that deals into wealth management space, Paytm also incorporated Paytm Life Insurance Ltd, and Paytm General Insurance Corporation Ltd. in February last year.

Citing anonymous sources, ET reports that the deal could see resistance from SoftBank as the Japanese investment conglomerate also own stakes in Policybazaar. Existing investors including SAIF Partners, Accel and Catamaran Ventures will be exiting if the deal gets through.

Currently, Coverfox has a network of 50,000 agents and offers life and non-life policies across 45 insurers. The Mumbai-based company also had processed $100 million worth premiums with a turnover of $22 million. Further, it also claimed to complete 1 million transactions in 2018.

Tech-enabled distribution of insurance and collection of premiums are big opportunities to cash on. While there are several firms such as Policybazaar and Coverfox have solely been eyeing to crack insurance space with a combination of digital and offline formats.

Paytm has a lot of data on consumer payment behaviour and transaction patterns. It will leverage the power of data in cross-selling insurance. For instance, if you buy expensive iPhone using Paytm Mall or any other stores (but paid via Paytm wallet or UPI) it realises that you are likely to insure it.

In FY18, Coverfox had clocked a revenue of Rs 12.42 crore, almost twice the figure of Rs 6.12 crore in FY17. Commission income contributed 97.5% (Rs 11.25 crore) to this figure by recording a 2.7X jump from Rs 4.2 crore in the previous fiscal.

Valued at little over $100 million, Coverfox has raised about $50 million across three institutional and a seed round. About a year ago, the firm had raked in $22 million Series C round led by US insurer Transamerica.