Indian Insurtech unicorn Digit Insurance, that raises an estimated $440mn, filed its IPO

Indian Insurtech Digit Insurance has gone ahead and filed filed the draft red herring prospectus (DRHP) for an initial public offer (IPO) with the Securities and Exchanges Board of India (SEBI).

Founded by Kamesh Goyal, Bengaluru-based Digit Insurance has crossed Rs 5,000 crore in gross written premium in a span of less than five years. In 2021, the startup not only became the first Indian unicorn of the year but also the first insurtech company to achieve the coveted billion-dollar valuation.

The IPO will contain a fresh issue worth INR 1,250 Cr and an offer for sale (OFS) of 109.45 Mn shares from existing shareholders. The total offer size will be made clear in the subsequent filings with the market regulator, it seems.

According to reports, Digit Insurance, which was founded in 2017, is seeking to raise an estimated US$440mn. The company recently received a valuation of US$3.5bn following heavy investment from a funding round in 2021, which was led by Sequoia Capital, A91 Partners, Faering Capital, and Fairfax.

  • The IPO will contain a fresh issue worth INR 1,250 Cr and an offer for sale of 109.45 Mn shares from existing shareholders
  • Digit Insurance’s loss after tax remained at INR 295.86 Cr, up 141% from the INR 122.76 Cr it reported the previous fiscal year
  • Digit also reported INR 6,095.24 Cr in premiums received in FY22, up 68% from FY21

Digit Insurance has a robust marketplace reputation in the region and provides auto, travel, and health insurance cover to a growing demographic of previously uninsured Indian customers. The insurtech’s aim is to ease the nation’s protection gap through its user-friendly and frictionless solutions that can all be accessed and managed via the company’s intuitive mobile app.

Launched by former KPMG executive, Kamesh Goyal, the company has moved from strength to strength.

While insurtech globally has seen a downturn in investment and the number of companies filing IPOs has dropped, Digit Insurance has not seen any shortage of interest from venture capitalists – suggesting that only a portion of the insurtech sector is currently suffering from the economic climate.

Indian Insurtech unicorn Digit

ICICI Securities, Morgan Stanley, Axis Capital, Edelweiss, HDFC Bank and IIFL Securities are the bookrunners for the IPO.

Speculation around the insurtech major’s IPO was rife for the past few months, with media reports in May suggesting that the startup might go public in a $500 Mn IPO, looking at a valuation of $4.5-5 Bn. Media reports had suggested that Digit Insurance would file the DRHP by September and go public in January 2023.

The insurance industry in India is estimated to be worth $280 billion, reveals India Brand Equity Foundation (IBEF). However, the penetration levels of insurance across the country remain below five percent.

According to the Insurance Regulatory Authority of India (IRDA), the overall insurance penetration level for FY21 stood at 4.20 percent of which life segment was 3.2 percent and non-life at just one percent.

Additionally, premium volumes generated by the Indian insurance sector in 2020 stood at $107.99 billion of which $81.25 billion came from life insurance and non-life was $26.74 billion.

by Peter Sonner