Paytm in talks to acquire Coverfox for around $120 million

Digital payments company Paytm is in talks to acquire Mumbai-based insurance marketplace Coverfox for $100-120 million in an all-cash deal, said two people aware of the matter. 

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.

SoftBank Vision Fund, a large investor in Paytm’s parent One97 Communications, is also a significant shareholder in PolicyBazaar, which may pose challenges to the deal, people close to the development said. “The Paytm board is in the process of finalising the contours of the deal,” said one of them.

“There is still a chance that it may fall through as the board deliberates on the pros and cons of the transaction,” the person added.

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.

Founded in 2013 by Varun Dua and Devendra Rane, Coverfox has been in talks to raise a $50 million series D round even as the acquisition talks have been going on in parallel, another source said. Dua moved out in 2017 to head Acko, a new-age insurance firm that competes with the likes of Digit Insurance, which is backed by Canadian billionaire Prem Watsa’s Fairfax Holdings.

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