India-based Digit Insurance, backed by Canadian billionaire Prem Watsa’s Fairfax Group, is reportedly considering raising about $500m in an initial public offering at a valuation of $4.5-5bn.
According to a report by Reuters, Digit has appointed Morgan Stanley and Indian investment bank ICICI Securities as bookrunners for the deal. Its sources revealed that Digit plans to file its draft documents to the markets regulator by September and list by January. The sources requested anonymity as they were not authorised to talk to the media.
Founded in 2017, Digit is trying to capitalise on India’s under-penetrated general insurance market. The company enables consumers to buy vehicle, travel, property, flight delay, health, mobile, holiday home and shop insurance. Digit also lets users purchase policies, make renewals or complete claims through their mobile devices.
The InsurTech unicorn reportedly raised INR 417 crore ($54.6m) in fresh funding earlier this month, which brought its valuation to $4bn.
Digit Insurance raised a $70m funding round back in January 2022, with commitments coming from Wellington Hadley Harbor and Ithan Creek Master Investors. The InsurTech company became a unicorn in early 2021, after a $18.5m investment put its valuation at $1.9bn.
However, this announcement comes at a time when IPOs in India have not done well in the past few months, and Indian start-ups have struggled to raise money privately in the past year.
For example, state-owned Life Insurance Corp dropped 7.8% on debut this month after it raised $2.7bn, far less than its original plan of $12bn. FinTech firm Paytm also plunged on its debut last November following a $2bn IPO.
According to the Reuter report, Bankers have said that demand for Digit’s IPO will depend on how it prices its shares, in addition to macroeconomic factors such as inflation fears and rising interest rates.
“Digit is growing fast, so by the time they start talking to IPO investors, the $4 bn valuation will seem outdated,” one banker said. “Given they don’t burn cash, it is an attractive proposition for institutional investors.”
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