Axis, HDFC To Pick Up Stake In IPO-Bound Go Digit

Axis Bank and HDFC Bank, two of India’s largest private lenders, have signed definitive agreements to pick up a 9.94% equity stake each in the life insurance business of the IPO-bound insurtech unicorn Go Digit, regulatory filings showed.

Axis and HDFC signed the definitive agreements on April 21 (Friday). While HDFC had proposed investment in August 2022, Axis made the same proposal last September, per their regulatory filings with the Bombay Stock Exchange (BSE).

Both banks will be investing up to INR 69.90 Cr each in the insurtech unicorn’s life insurance arm, Go Digit Life, in two tranches.

The first tranche will be worth INR 10.93 Cr as an initial subscription, which will see the banks get a stake in the business. The banks may choose to invest the remaining INR 58.97 Cr later.

In the filing, Axis and HDFC said that they and their subsidiaries “may have business dealings with Go Digit Life at an arm’s length basis.”

However, this investment is subject to Go Digit receiving a life insurance licence from Insurance Regulatory and Development Authority (IRDAI). Notably, there are only 25 life insurers in India, with Go Digit’s competitor ACKO getting a licence in March this year.

According to their respective filings, Axis and HDFC will complete the first tranche within three to six months of the date when the insurtech receives the licence.

However, it might be tricky for Go Digit to get the IRDAI approval for a life insurance licence for a couple of reasons. First, the regulator had said at its previous meeting that it has around 20 more companies in the pipeline, which might delay approval significantly. 

Second, the insurtech unicorn and IRDAI are in a standoff over a recent rule that entails an increased lock-in period for its stakeholders if it goes ahead with the planned listing.

Ahead of its IPO, Go Digit also refiled papers with the Securities and Exchange Board of India (SEBI) for its $440 Mn public issue. The insurtech unicorn’s IPO comprises a fresh issue of shares worth INR 1,250 Cr and an offer for sale (OFS) of 109.45 Mn shares. 

Founded in 2017 by Kamesh Goyal, Go Digit offers insurance policies across verticals including health, motor vehicle, travel, property, and more. In FY22, its loss widened by 141% year-on-year (YoY) to INR 295.8 Cr. Operating revenue stood at INR 5,267.6 Cr in the year as against INR 3,243.4 Cr in FY21.