India’s Digit Insurance coverage, backed by Canadian billionaire Prem Watsa’s Fairfax Group, is contemplating elevating about $500 million in an preliminary public providing at a valuation of $4.5 billion to $5 billion, three individuals conscious of the matter instructed Reuters.
Based in 2017, Digit is attempting to capitalize on India’s under-penetrated normal insurance coverage market together with customers’ want for a greater buyer expertise like simpler declare settlements, although IPOs within the nation haven’t completed effectively previously few months.
Digit has appointed Morgan Stanley and Indian funding financial institution ICICI Securities as bookrunners for the deal. It plans to file its draft paperwork to the markets regulator by September and listing by January, stated the individuals, who sought anonymity as they weren’t licensed to speak to the media.
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A spokesperson for Digit declined to touch upon “hypothesis.” ICICI too declined to remark whereas Morgan didn’t reply to emails looking for remark.
Digit was valued at near $4 billion earlier this month when it raised a tranche of funding. It has up to now raised greater than $400 million from Sequoia Capital, A91 Companions and Faering Capital, moreover Fairfax.
India’s greatest public providing – of state-owned Life Insurance coverage Corp. – dropped 7.8% on debut this month after it raised $2.7 billion, far lower than its unique plan of $12 billion. Fintech agency Paytm additionally plunged on its debut final November following a $2 billion IPO.
Indian start-ups even have discovered it tough to boost cash privately this 12 months after a growth in 2021.
India’s insurance coverage regulator requires corporations within the sector to be not less than 5 years previous earlier than going public, which Digit will fulfill by September. Digit plans to boost cash by providing new shares together with Fairfax, its largest shareholder with about 30%, trimming its stake, the individuals stated.
Fairfax couldn’t instantly be contacted.
Digit founder Kamesh Goyal is a veteran of the insurance coverage trade who labored with Germany’s Allianz and headed its Indian three way partnership. Indian cricket star Virat Kohli is an investor and its model ambassador.
Non-life insurance coverage penetration in India stood at solely 0.94% in 2020/21, from 0.56% about 20 years in the past, knowledge from the Insurance coverage Regulatory and Improvement Authority of India exhibits.
Digit has served greater than 20 million clients throughout automotive, bike, well being and journey insurance coverage, as per its web site.
Its income surged 62% to about $675 million within the final fiscal 12 months, outpacing the trade’s 11% enhance. The corporate recorded a web lack of $7.8 million on income of $309 million in 2020/21, however its newest revenue or losses couldn’t instantly be ascertained.
Digit is amongst India’s few startup unicorns – a time period for corporations valued at greater than $1 billion – which is worthwhile or near profitability, one of many individuals stated.
Bankers say that demand for Digit’s IPO will depend upon the way it costs its shares, along with macroeconomic components. Inflation fears and rising rates of interest are weighing on IPO demand in India and overseas.
“Digit is rising quick, so by the point they begin speaking to IPO buyers, the $4 billion valuation will appear outdated,” one banker stated. “Given they don’t burn money, it’s a lovely proposition for institutional buyers.”
(Reporting by M. Sriram; modifying by Krishna N. Das and Stephen Coates)
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