Capital markets regulator Sebi has kept in “abeyance” the proposed initial public offering (IPO) of Go Digit General Insurance Ltd, backed by Canadian private equity investor Prem Watsa’s Fairfax Group.
Without disclosing the reason, Securities and Exchange Board of India (Sebi) informed in a public disclosure that the “issuance of observations (has been) kept in abeyance” with regard to the IPO of Go Digit, as per an update on the regulator’s website on Monday. The information was updated as on September 16.
GoDigit General Insurance Ltd had filed preliminary IPO papers with the regulator on August 17.
The issuance of observations by Sebi implies its go-ahead for an IPO and the regulator usually gives its observations on IPO papers in 30 days.
Last month, the company, which also counts cricketer Virat Kohli and Bollywood actor (and his wife) Anushka Sharma, announced its plans to raise Rs 1,250 crore via the IPO through fresh issurance of equity shares and an additional offer for sale (OFS) of 10.94 crore equity shares by a promoter and existing shareholders.
The company refused to comment on the Sebi observation.
A similar observation was made by Sebi on approval process of Warburg Pincus and Faering Capital-backed ethnic wear fashion label Biba Fashion.
Go Digit offers motor insurance, health insurance, travel insurance, property insurance, marine insurance, liability insurance, and other insurance products.
Proceeds from the fresh issuance of the IPO were to be utilised for the augmentation of the company’s capital base and maintenance of solvency levels and general corporate purposes.
In the IPO, promoters that would trim their stake include - Go Digit Infoworks (up to 10.9 crore shares); Nikita Vakharia and Mihir Vakharia (up to 4,000 shares); Nikunj Shah and Sohag Shah (up to 3,778 shares); Subramaniam Vasudevan with Shanti Subramaniam (up to 3,000 equity shares).
As per the DRHP (draft red herring prospectus) for the IPO, the company is also in consultation with merchant bankers for a pre-IPO placement of equity shares, or any other method aggregating up to Rs 250 crore. Should such a placement occur, the fresh issue size will be reduced, it said.
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.
In January 2021, the insurtech platform became the first startup to turn unicorn, and if cleared by Sebi, it will be the second new age insurance company after PB Fintech-owned PolicyBazaar, to list on bourses. It was valued in between the range of $3.5-4 billion in its latest fundraising in May this year. With the IPO, Go Digit is eyeing a valuation of $4.5-5 billion, as per a Reuters report.
Founded in 2017, Go Digit counts marquee investment houses such as Sequoia Capital, A91 Partners, Faering Capital, TVS Capital, among its list of other investors.
Last month, private sector lender HDFC Bank announced that it will pick up 9.94% stake in Go Digit.
Insurance regulator IRDAI requires companies to be at least five years old before listing on stock exchanges. Go Digit turned five this month.
The Bengaluru-based company offers motor, health, travel, property, marine and liability insurance and claims to be one of the top 10 private general insurers by gross written premium (GWP) in FY20 and FY21.
It is among the first non-life insurers in India to be fully operated on the cloud and has developed application programming interface (API) integrations with several channel partners.
The company’s Asset under Management (AUM) increased 68% from Rs 5,590 crore in FY21 to Rs 9,394 crore in fiscal 2022, primarily due to an increase in GWP and additional capital infusion from share issuances with gross proceeds of Rs 1,026.5 crore.
For the past three years, its track record reports growth of Gross Written Premium (GWP) at Rs 5,268 crore, Rs 3,243 crore and Rs 2,252 crore in financial years 2022, 2021, and 2020, respectively, with a compound annual growth rate (CAGR) of 53% from fiscal 2020 to fiscal 2022.