Fairfax-backed Go Digit General Insurance files DRHP for IPO

New age insurer Go Digit General Insurance filed its draft red herring prospectus (DRHP) with the markets regulator Securities and Exchange Board of India (SEBI) to raise funds through an initial public offering (IPO).  

The public issue consists of a fresh issue of equity shares worth up to Rs 1,250 crore and an offer-for-sale (OFS) up to 109,445,561 equity shares by promoter and selling shareholders. 

The offer is being made through the book building process, wherein at least 75 per cent of the offer shall be available for allocation to qualified institutional buyers, not more than 15 per cent of the offer shall be available for allocation to non-institutional bidders, and not more than 10 per cent of the offer shall be available for allocation to retail individual bidders. 

Additionally, the company is in consultation with merchant bankers to the issue may consider a pre-IPO placement of equity shares, or any other method aggregating up to Rs 250 crore. If such placement is completed, the fresh issue size will be reduced. 

The proceeds from its fresh issuance are worth Rs 1,250 crore and will be utilised for the augmentation of the company’s capital base and maintenance of solvency levels and general corporate purposes. 

Go Digit offers motor insurance, health insurance, travel insurance, property insurance, marine insurance, liability insurance, and other insurance products, to meet the needs of the customers.  

The company has an established track record of delivering growth. GWP stood at Rs 52.68 billion, Rs 32.43 billion, and Rs 22.52 billion in fiscals 2022, 2021, and 2020, with a CAGR of 52.9 per cent from fiscal 2020 to Fiscal 2022. The company’s net expense ratio has decreased from 42.4 per cent for fiscal 2020 to 35.4 per cent for fiscal 2021 and 38.7 per cent for fiscal 2022, highlighting operating leverage in their business model.  

The company’s asset under management (AUM) increased 68 per cent from Rs 55,901.11 million in the financial year 2021 to Rs 93,938.75 million in the financial year 2022, primarily due to an increase in GWP and additional capital infusion from share issuances with gross proceeds of Rs 10,265.32 million.  

ICICI Securities Limited, Morgan Stanley India Company Private Limited, Axis Capital Limited, Edelweiss Financial Services Limited, HDFC Bank Limited, and IIFL Securities Limited are the book running lead managers and Link Intime India Private Limited is the registrar to the offer. The equity shares are proposed to be listed on BSE and NSE.