Digit Insurance targets $5 billion in IPO valuation: Report – Times of India

MUMBAI: Digit Insurance, 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 folks conscious of the matter informed Reuters.
Based in 2017, Digit is making an attempt to capitalise on India’s under-penetrated common insurance coverage market together with customers’ want for a greater buyer expertise like simpler declare settlements, although IPOs within the nation haven’t finished nicely prior to now few months.
Digit has appointed Morgan Stanley and 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 folks, who sought anonymity as they weren’t authorised to speak to the media.
A spokesperson for Digit declined to touch upon “hypothesis”. ICICI too declined to remark whereas Morgan didn’t reply to emails in search of 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, in addition to 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 authentic plan of $12 billion. Fintech agency Paytm additionally plunged on its debut final November following a $2 billion IPO.
Begin-ups even have discovered it tough to lift cash privately this 12 months after a increase in 2021.
India’s insurance coverage regulator requires firms within the sector to be a minimum of 5 years previous earlier than going public, which Digit will fulfil by September. Digit plans to lift cash by providing new shares together with Fairfax, its largest shareholder with about 30%, trimming its stake, the folks stated.
Fairfax couldn’t instantly be contacted.
Digit founder Kamesh Goyal is a veteran of the insurance coverage business who labored with Germany’s Allianz and headed its Indian three way partnership. 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, information from the Insurance coverage Regulatory and Growth Authority of India reveals.
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 business’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 few startup unicorns – a time period for firms valued at greater than $1 billion – which is worthwhile or near profitability, one of many folks stated.
Bankers say that demand for Digit’s IPO will rely 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 do not burn money, it’s a lovely proposition for institutional buyers.”

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