PB Fintech’s Rs 696-crore investment for a 34% stake in PB Healthcare Services, a venture that’s aimed at creating a network of hospitals where costs are tightly controlled, has evoked mixed responses on the Street. The intention is no doubt noble one — to make sure hospitals don’t overcharge patients and that insurers are not cheated. As Chairman & Group CEO of PB Fintech, Yashish Dahiya, explains patients walking into these hospitals will not need to utter the two words: ‘bill’ and ‘claim’.
But PB Fintech’s 180 degree pivot from an asset-light tech platform to an asset-heavy hospital business will be a challenge. While Dahiya gets full marks for having built a great business in Policybazaar, owning a chain of hospitals and being an insurance broker are quite different, say experts. Even Dahiya acknowledges the risks. “There is a 50% chance the project will fail and 50% chance it will succeed,” he says. But then, he’s looking at it from an entirely different perspective. The primary goal, he says, isn’t profit but to boost the penetration of health insurance in India and build trust between patients, insurers and healthcare providers.
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To be sure, as Dahiya has clarified, PB Fintech will be a one-time investor — acting as an “incubator” and a “catalyst,” not a long-term owner. Along with PB Fintech’s Rs 696 crore, co-founders Dahiya and Alok Bansal, and some other key executives, will invest Rs 133 crore, taking their collective ownership in the new venture to 40%.
Dahiya has indicated that PB Fintech’s stake will go down to 25% after the first round of external investments which are expected by end-July. At the same time, he isn’t ruling out further infusions. “At this point, I do not envisage PB Fintech investing again, but that’s not a commitment that we never will,” he says. Nischint Chawathe and MB Mahesh of Kotak Institutional equities (KIE) point out that while companies such as Narayana Health are offering closed-loop insurance products to leverage their healthcare ecosystems, it is too early to gauge PB’s success.
Madhukar Ladha, Director-Equity Research, Nuvama Institutional Equities, lauds the quality of the management. “It is a conservative management. They do not overspend on acquisitions,” he observes. While the project could well succeed,
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