Policybazaar shares fall 12% on stake sale by CEO; down 41% against IPO price

Shares of PB Fintech, which owns online insurance broker Policybazaar and loan business Paisabazaar, tumbled more than 12% in intraday trade on Tuesday after its executive chairman and CEO proposed to dilute stake in the company through open market. The company in an exchange filing said that its CEO Yashish Dahiya will sell up to 3,769,471 equity shares via bulk deals. The capital proceeds are intended to be used to make the payment of current and future taxes.

“The company has received an intimation from Yashish Dahiya, chairman and CEO of the Company, for an intention to sell up to 37,69,471 equity shares via bulk deals on the stock exchanges,” PB Fintech said in a BSE filing on Monday.

Reacting to the news, PB Fintech shares opened the day in the red at ₹648, against the previous closing price of ₹658.35 on the BSE. Extending opening losses, the stock declined as much as 12.5% to hit an intraday low of ₹576.25. Meanwhile, the BSE Sensex was trading near its day’s low of 55,035, down 635 points, as investors turned cautious ahead of the Reserve Bank’s policy statement slated to be released tomorrow.

The financial services firm has underperformed the benchmark index since its listing on November 15, 2021. The stock traded 41% lower than its issue price of ₹980, while it dropped 61% as compared to its 52-week high of ₹1,470 touched on November 17, 2021. The stock hit its 52-week low levels of ₹542.30 on May 12, 2022.

As per the filing, the aggregate shareholding of Yashish Dahiya after the initial public offer (IPO) of the company was 1.72 crore shares, or 3.84%, and total number of ESOPs options vested and due for exercise immediately after the public listing were 1.06 crore.

“Out of the above outstanding stock options, Dahiya exercised 1,05,09,601 shares during February 2022 and May 2022. The remaining 1,47,899 vested ESOPs will be exercised within next few days. Apart from above vested stock options, 71,96,604 stock options were granted on October 05, 2021 which will get vested and exercisable over a period of 5 years commencing from the grant date i.e. October 05, 2021,” the filing noted.

As of March 31, 2022, the aggregate shareholding of Dahiya was 1,90,08,349 (4.23%) and post exercise of 55,09,601 ESOPs during May 2022 his aggregate shareholding rose to 2,45,17,950 (5.45%).

“As the ESOPs are subject to payment of taxes on exercise in addition to the payment of capital gain tax on the sale of shares, the proceeds from the sale of the 37,69,471 shares are proposed to be used to make the payment of current and future taxes,” the company said.

This is the second major stake sale by the company’s top executive since its market debut. In February this year, its co-founder Alok Bansal offloaded 2.85 million shares of PB Fintech at an average price of ₹825 apiece for total consideration of ₹236 crore through an open market transaction.

The company raised ₹5,710 crore through IPO in November 2021, which saw its co-founders and other shareholders selling their ownership in the financial services firm.