Capital markets regulator Securities and Exchange Board of India (SEBI) has kept in 'abeyance' the proposed initial public offering (IPO) sale of Canada-based Fairfax Group-backed Go Digit General Insurance Ltd. However, SEBI has not provided any reason for putting the IPO in 'abeyance'. A notification on its website says the “issuance of observations (has been) kept in 'abeyance'.” The 'abeyance' status, however, does not mean the IPO has been rejected, while the regulator may require additional information from the company. As per the rules, SEBI can keep its observations on IPO papers in 'abeyance' for a specific period of 30 days or 45 days or 90 days, or more.
Go Digit offers motor insurance, health insurance, travel insurance, property insurance, marine insurance, liability insurance, and other insurance products. It is one of the first non-life insurers in India to be fully operated on the cloud and has developed application programming interface integrations with several channel partners.
Digit Insurance is a digital full stack insurance company backed by cricketer Virat Kohli, his actress wife Anushka Sharma and Canadian billionaire Prem Watsa. The draft red herring prospectus (DRHP) submitted by the insurer to SEBI on 17 August 2022, showed that the initial issue will comprise fresh issue of shares as well offer for sale (OFS) portions. Under the fresh issue portion of its IPO, Digit Insurance will issue an unspecified number of shares aggregating Rs1,250 crore. In the OFS portion, the Digit Insurance DRHP says, selling shareholders will offload 109,445,561 equity shares of the company.
The selling shareholders include Go Digit Infoworks Services Private Limited (109,434,783 shares), Nikita Mihir Vakharia jointly with Mihir Atul Vakharia (4,000 shares), Nikunj Hirendra Shah, jointly with Sohag Hirendra Shah (3,778 shares), and Subramaniam Vasudevan jointly with Shanti Subramaniam (3,000 shares).
ICICI Securities, Morgan Stanley India Company, Axis Capital, Edelweiss Financial Services, HDFC Bank, and IIFL Securities are the book running lead managers to the issue.
Neither Virat Kohli, who is an investor and the brand ambassador of Digit Insurance, nor Prem Watsa’s Fairfax group will offload any stake in this IPO, the DRHP shows. The aim of launching the IPO is to use the proceeds to augment its capital base to meet future capital requirements and maintain solvency levels, the company says.
The funds will be deployed in the current fiscal (FY22-23). As per the extant regulatory norms maintained by the Insurance Regulatory and Development Authority of India (IRDAI), Digit Insurance is required to maintain a minimum solvency ratio of 1.50x.
On 26 August 2022, banking major HDFC Bank had also announced to invest up to Rs69.9 crore in Go Digit for about a 9.95% stake.
Go Digit, which started its journey in October 2017, became a unicorn in 2021 and is valued at US$3.5bn (billion). The promoters of Go Digit Infoworks Services are Kamesh Goyal, Oben Ventures LLP (formerly Oben Ventures) and FAL Corporation.
In its last funding round in July 2022, Digit Insurance had raised US$200mn (million) from its existing investor Faering Capital and new investors like Sequoia Capital India, IIFL Alternate Asset Managers and a few others. This brings the total capital infused into Digit Insurance to US$442mn (million).
The Bengaluru-based company has a track record of delivering growth with gross written premium at Rs5,268 crore, Rs3,243 crore and Rs2,252 crore in financial years 2022, 2021, and 2020, with a compounded annual growth rate (CAGR) of 53% from fiscal 2020 to fiscal 2022.
The company had incurred a loss after tax of Rs295.8 crore in fiscal 2022, Rs122.7 crore in fiscal 2021 and Rs175.2 crore in fiscal 2020.
