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Virat Kohli-Backed Insurtech Unicorn Digit Insurance Eyeing $500 Mn IPO

Digit Insurance will reportedly aim for a valuation between $4.5 and 5 Bn

Digit will join Policybazaar as the second Indian insurtech unicorn to go public

The insurtech unicorn will issue fresh shares for the IPO, while Fairfax, its largest stakeholder, will also reduce its stake in the company

Bengaluru-based insurtech startup Digit Insurance is reportedly considering raising about $500 Mn through its initial public offering (IPO).

The insurtech unicorn, backed by Virat Kohli (who is also Digit’s brand ambassador) and marquee investors such as Sequoia Capital, A91 Partners, Faering Capital and billionaire Prem Watsa’s Fairfax Group, will look at a valuation of $4.5-5 Bn in the IPO.

Once listed, Digit will join Policybazaar as the second Indian insurtech unicorn to go public.

Founded in 2017 by Kamesh Goyal, Digit Insurance offers insurance policies in multiple verticals such as health, auto, travel, smartphones, and commercial properties such as stores and holiday homes. Digit has served more than 20 million customers across car, bike, health and travel insurance segments, as per its website.

According to the Reuters report, Digit Insurance has appointed Morgan Standley and ICICI Securities as bookrunners for the deal. The insurance startup plans to file its draft red herring prospectus (DRHP) by September and list on exchanges by January 2023.

Last year, Digit raised INR 121 Cr in a funding round, taking its valuation to $4 Bn. So far, it has raised more than $400 Mn from investors.

The startup would wait till September to file its DRHP as the insurance regulator Insurance Regulatory and Development Authority (IRDAI) requires insurtech companies to be at least 5 years old before going public.  Digit, founded in October 2017, will fulfil this requirement by then.

The insurtech unicorn plans to raise funds by offering new shares, while Fairfax, the largest stakeholder with a 30% stake, will reduce its holding in the company.

According to IRDAI data, non-life insurance penetration in India stood at only 0.94% in FY21, up from about 0.56% about two decades ago. Digit is addressing this huge, unexplored market which can give huge dividends as education and awareness about insurance increases.

As per IRDAI data, Life Insurance Corporation Of India’s (LIC’s) income from new premiums fell between April and December 2021, while private insurance players grew their new business income by 29.8%.

Digit Insurance’s net premiums surged to INR 3,404.21 Cr in FY22, up 75% from INR 1,903.69 Cr it recorded last fiscal. At the same time, Digit’s operating losses widened to INR 375.16 Cr, up 102% from the INR 185.49 Cr in FY21.

State-owned insurer LIC went public earlier this month. Its INR 21,000 Cr IPO was oversubscribed 2.95 times.

Earlier this year, LIC revealed plans to launch a digital platform and vertical after its market share fell from 74% to 61% between June 2020 and January 2022. Even so, LIC remains the leader in the insurance market by a long mile. 

In FY21, LIC’s market share was at 64% in terms of gross written premium (GWP), 66% in terms of NBP, 75% in terms of the number of individual policies issued, and 81% in terms of the number of group policies issued.

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