India’s Digit Insurance, backed by Canadian billionaire Prem Wat’s Fairfax Group, is looking to raise about $500 million in an initial public offering at a valuation of $4.5 billion to $5 billion, three people familiar with the matter told Reuters. . Digit’s founder Kamesh Goyal is an insurance industry veteran who worked with Germany’s Allianz and led its Indian joint venture. Indian cricket star Virat Kohli is an investor and its brand ambassador.
Founded in 2017, Digit is trying to capitalize on India’s low-penetration general insurance market along with users’ need for better customer experience like easy claim settlement, though IPOs in the country haven’t done well in the past few months. Is.
numbers Morgan Stanley and Indian investment bank ICICI Securities have been appointed as bookrunners for the deal. People who sought anonymity as they were not authorized to speak to the media said it plans to file its draft documents to the markets regulator by September and list by January.
A Digit spokesperson declined to comment on “speculation.” ICICI too declined to comment, while Morgan did not respond to an email seeking comment.
Digit was valued at about $4 billion earlier this month when it raised a tranche of funding. It has raised more than $400 million to date from Sequoia Capital, A91 Partners and Fairing Capital, in addition to Fairfax.
India’s biggest public offering – state-owned Life Insurance Corp – raised $2.7 billion after a 7.8% drop earlier this month, far short of its original plan of $12 billion. Fintech firm Paytm also made its debut last November after a $2 billion IPO.
Indian start-ups have also found it difficult to raise money privately this year after a boom in 2021.
Companies in the sector must be at least five years old before India’s insurance regulator can go public, which Digit will complete by September. Digit plans to raise funds by offering new shares with its largest shareholder, Fairfax, which holds about 30%, the people said.
Fairfax could not be immediately reached.
Non-life insurance penetration in India was only 0.94% in 2020/21 from 0.56% nearly 20 years ago, data from the Insurance Regulatory and Development Authority of India shows.
Digit has served over 20 million customers across car, bike, health and travel insurance, according to its website.
Its revenue grew 62% over the past fiscal year to nearly $675 million, outpacing the industry’s 11% growth. The company reported a net loss of $7.8 million on revenue of $309 million in 2020/21, but its latest profit or loss could not be immediately ascertained.
Digit is one of the few startup unicorns in India – a term for companies worth more than $1 billion – that are profitable or close to profitability, one of the people said.
Bankers say the demand for Digit’s IPO will depend on the prices of its shares, apart from macroeconomic factors. Fears of inflation and rising interest rates are weighing on the demand for IPOs in India and abroad.
“The numbers are rising fast, so by the time they start talking to IPO investors, the $4 billion valuation will be out of date,” said one banker. “Given that they do not burn cash, this is an attractive proposition for institutional investors.”