Digit Insurance re-files IPO papers after regulator concerns: Report

Fairfax-backed Go Digit Insurance has re-filed its draft papers for a $440 million initial public offering (IPO) after addressing the market regulator's concerns related to the company’s employee stock plans, which had stalled the offering for months, a report by Reuters said.

The insuretech unicorn, which counts Canadian billionaire Prem Watsa's Fairfax Group and TVS Capital Funds among its backers, had first filed the draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) in August 2022 to raise funds through an IPO. 

However, on January 30, the markets regulator returned the papers “owing to ICDR (Issuance of Capital and Disclosure Requirements) rules, which exempts rights granted under employee stock option plans to subsist at the time of filing the draft prospectus, but does not similarly exempt employee stock appreciation rights,” Digit had said in a statement. 

Digit told Reuters it was evaluating amendments to its employee stock appreciation rights scheme after receiving SEBI's letter.

Such rights provided by the company enabled an employee to receive a bonus equivalent to the rise in the company's stock price over a certain period, which Indian regulations prohibit for companies going public. 

Due to this, Digit was found "not to be eligible for making an initial public offer", according to SEBI's letter. 

Go Digit’s proposed IPO comprises a fresh issuance of equity shares worth Rs 1,250 crore and an offer for sale (OFS) of 10.94 crore equity shares by a promoter and existing shareholders. In the OFS, Go Digit offers to sell 10,94,34,783 equity shares.

As per the draft papers, the proceeds are proposed to be utilised for the augmentation of the company's capital base and maintenance of solvency levels and general corporate purposes. 

The company, which offers insurance across the motor, health, travel, property, and marine, among other segments, was last valued at $3.5 billion by Sequoia Capital. Cricketer Virat Kohli and his wife and actor Anushka Sharma are among the investors in the firm.