Fairfax-backed general insurance firm Go Digit files DRHP for IPO

Go Digit, the general insurer backed by Canada’s Fairfax, has filed its draft red herring prospectus (DRHP) to raise around Rs 5,000 crore through an initial public offering (IPO) that will include fresh issuance of equity shares and an offer-for-sale.

It will be the first general insurer to be listed on the bourses in five years. ICICI Lombard General Insurance and New India Assurance went public in 2017. The company, formally known as Go Digit General Insurance, is looking to issue fresh equity of Rs 1,250 crore while the offer-for-sale will consist of 109.4 million equity shares by promoters and selling shareholders.

Go Digit Infoworks Services Pvt Ltd, the promoter holding around 86.35 per cent stake in the company, will offload 109 million shares. Investors Nikita Mihir Vakharia and Mihir Atul Vakharia will sell up to 4,000 equity shares, Nikunj Hirendra Shah and Sohag Hirendra Shah will sell 3,778 equity shares, and Subramaniam Vasudevan jointly with Shanti Subramaniam will sell 3,000 equity shares.

Also Read: Go Digit clocks Rs 5,000 crore premium in FY22 on strong growth

The company will use the proceeds from fresh issuance of shares to augment its capital base, maintain solvency and for general corporate purposes.

The Bengaluru-based firm provides health, travel, property, marine, liability, and other general insurance. It may in consultation with merchant bankers consider a pre-IPO placement of equity shares, or any other method aggregating up to Rs. 250 crores. If such placement is completed, the fresh issue size will be reduced, it said.

It earned premiums to the tune of Rs 5,268 crore in FY22. In FY21 and FY20, premiums collected by the company stood at Rs 3,243 crore, and Rs 2,252 crore, respectively. It has delivered a compounded annual growth rate of 52.9 per cent from FY20 to FY22 as far as premiums is concerned.

It has however posted losses to the tune of Rs 295.86 crore in FY22, followed by Rs 122.27 crore in FY21, and Rs 175.24 crore in FY20.

Go Digit is a unicorn, meaning it has a valuation of over $1 billion. It is one of 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, with 1,063 API integrations with partners and 16.57 million policies issued by partners with API integrations since inception to March 31, 2022.

ICICI Securities, Morgan Stanley India, Axis Capital, Edelweiss Financial Services, HDFC Bank, and IIFL Securities are the book running lead managers and Link Intime India is the registrar to the offer.

Points To Ponder

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  Unicorn will be first general insurer to be listed on the bourses in five years
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  The company earned premiums to the tune of Rs 5,268 crore in FY22
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  The Bengaluru-based firm provides health, travel, property, marine, liability, and other general insurance
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  It is one of the first non-life insurers in India to be fully operated on the cloud
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  The firm will use the proceeds from fresh issuance of shares to augment its capital base