Digital payments company Paytm is in talks to acquire Mumbai-based insurance marketplace Coverfox for $100-120 million in an all-cash deal.
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If the transaction goes through it will be the largest acquisition by the Vijay Shekhar Sharma-led company, which is making inroads into the financial services segment through its subsidiary Paytm Money. This will also see Paytm emerge as a direct competitor to the country’s largest online insurance marketplace PolicyBazaar.
In all, Coverfox has raised $40 million in capital and counts SAIF Partners, Accel Partners, NR Narayana Murthy’s Catamaran Ventures and International Finance Corporation among its investors. These shareholders are expected to get an exit if the deal takes place. SAIF is a common investor in Paytm and Coverfox.
Coverfox offers both life and non-life insurance policies. It has 50,000 agents and offers products from 45 insurance companies. The company sold premiums worth $100 million through its platform and generated $22 million in revenue with a million transactions done last year. Having started off by selling motor insurance, Coverfox wants to push term and life insurance products in the future driven mainly by its offline agent base.
After gaining a foothold in the digital payments business, One97 Communications launched Paytm Money in September 2018 with the intention of cornering the online mutual funds market. Having started with around a dozen asset management companies (AMCs), it now has all 40 in the country on board, offering direct mutual funds to clients.
Paytm Money competes with the likes of ET Money, owned by Times Internet, a part of the Times Group, which publishes this paper, Zerodha, FundsIndia and Scripbox.
Since its launch, Paytm Money has diversified into stock broking. Having received a broking licence, it intends to become a full-stack personal financial management application.