Digit Insurance drafts documents for INR 5000 crore IPO

Prem Watsa-backed Digit Insurance has filed draft documents for an IPO looking to raise INR 1,250 crore from a fresh issue of shares and an offer for sale of INR 10.94 crore equity shares for an undisclosed amount.

The company is also looking to invest more into their AI/ML driven microsystems that conduct damage identification, certain claim and loss assessment processes, invoice reading, document collection and identification and several other repetitive tasks by building their data bank. In FY 2022, 16.6% of their claims were handled automatically without human intervention.

Digit Insurance is predicted to sell shares worth around INR 250 crore in pre-IPO placement resulting in the reduction of the offer size, as mentioned in the draft red herring prospectus (DRHP) submitted to the Securities and and Exchange Board of India.

The issue will be managed by Axis Capital, ICICI Securities, Morgan Stanley India Co., Edelweiss Financial Services, HDFC Bank and IIFL Securities. The proceeds from the issue will be used for expansion of business, augmenting the capital base and consequently improving the solvency ratio. The firm has to maintain a minimum solvency ratio of 1.50x which was 2.01x on March 31, 2022.

According to the DRHP, the shareholders selling their stakes through the offer include Nikita Mihir Vakharia, jointly with Mihir Atul Vakharia, Nikunj Hirendra Shah, jointly with Sohag Hirendra Shah, Subramaniam Vasudevan, jointly with Shanti Subramaniam along with the promoter entity Go Digit Infoworks Services Private Limited that holds 83.65% stake in the company.

Sources say that the total size of the IPO is expected to be around INR 5000 crore.