Digit Insurance files IPO papers with SEBI

General insurance provider Digit Insurance has filed its Draft Red Herring Prospectus (DRHP) with market regulator SEBI. The company is looking to raise Rs 1,250 crore via a fresh issue. The IPO will contain an offer for sale (OFS) of 10.94 crore equity shares from the promoter group.

The A91 Partners-backed company was planning to file the IPO papers for the past few weeks. According to the company, it is looking to increase its capital base to meet future capital requirements and maintain its solvency levels.

The DRHP further said that the promoter group offered up to 109,445,661 equity shares which include 109,434,783 equity shares of Go Digit Infoworks Services Private Limited followed by Nikita Mihir Vakharia and Mihir Atul Vakharia’s 4,000 shares, Nikunj Hirendra Shah and Sohag Hirendra Shah’s 3,778 shares and Subramaniam Vasudevan and Shanti Subramaniam’s 3,000 shares.

Currently, Go Digit Infoworks Services Private Limited, the holding company of Digit, has 83.65% stake in the company followed by A91 Partners, TVS Capital Funds and Faering Capital with 3.36% stake each. Further Wellington Hadley and Sequoia Capital hold 1.49% and 1.04% respectively.

Digit Insurance's net earned premium rose 75% to Rs 3,404 crore in FY22 from Rs 1,944 crore in the previous fiscal year. The company’s net loss widened 140% to Rs 296 crore in FY22 as compared to Rs 123 in FY21 and Rs 175 crore in FY20. In a nutshell, the company is planning to hit bourses with losses in the three consecutive fiscal years. While that is hardly unusual in the long gestation insurance business, the current reception to loss making startups raising money might be a challenge.

It's worth noticing that the states of Karnataka, Maharashtra and Delhi, combined, accounted for 58.5% of our revenues in Fiscal 2022.

Around one dozen Indian startups including Paytm, Zomato, Nykaa, EaseMyTrip, Nazara Technologies, CarTrade, Freshworks, Fino, Policybazaar, and MapMyIndia have been listed on stock exchanges in the past 12 months. However, very few such as Nykaa, EaseMyTrip, and Nazara, were profitable before filing IPO papers.

Founded in 2017 with backing from Prem Watsa’s Fairfax Group, Digit is a general insurance company that deals in health, car, bike, and travel insurance. According to the company, Motor is the largest category for Digit followed by fire and health insurance. The firm has had former Indian cricket captain Virat Kohli fronting up as its brand ambassador for some time now.  Kohli was also an early investor in the firm.

In May, Digit cornered a new tranche of Rs 417 crore led by existing investors Sequoia Capital and India Infoline at a valuation of $4 billion. It’s also the highest valued startup in this segment followed by its competitor Acko which also turned unicorn in October last year after a $255 million round led by General Atlantic and Multiples Private Equity.