Chinese internet behemoth Tencent has acquired a 10% stake in Indian online insurance aggregation platform Policybazaar, according to Bloomberg. The deal is worth $150 million, setting Policybazaar’s valuation at $1.5 billion. US investor Tiger Global Management also owns a 20% stake in the insurance startup.
Policybazaar offers various categories of insurance including life, general, travel and health insurance. The platform aggregates policies and allows users to purchase them directly on the app, removing any middlemen from the process and ultimately making insurance more affordable and accessible for Indians.
India’s insurance market is severely underserved. According to the Indian government’s Brand Equity Foundation, India’s insurance penetration only recently passed 4% in 2017 and projected to quadruple in the next decade with a total market value of $60 billion.
India’s burgeoning internet economy has endowed the country with market conditions similar to that of China about a decade ago, categorized by increasing mobile internet penetration, and rising consumption levels. This creates a favorable investment environment for Chinese firms with experience dealing with such a macroeconomic transition. However, one of the challenges Indian internet firms face is attaining the level of localization required to scale a business within the country, as India has 22 official languages.
Tencent’s investment activity has adopted an increasingly regional focus, as the company expands outside its domestic market and explores opportunities in Asia more broadly. The company has backed companies in India including food delivery platform Swiggy, ride-hailing service Ola, and education platform Byju’s. Meanwhile Tencent also has significant investments in Southeast Asia in Singapore-based gaming company SEA and their subsidiary e-commerce platform Shopee, Indonesian super-app Gojek and others.