Digit Sets IPO Price Band At INR 258-272, Aims To Raise Over INR 2,600 Cr

SUMMARY

At the upper price band, the startup is expected to raise a total of INR 2,614.6 Cr

Digit Insurance has reserved 75% of the shares in the public issue for QIBs, 15% for NIIs, and 10% for retail investors

The bids for its IPO will close on May 17 and the company is eyeing to get listed by the end of this month, on May 23

Insurance tech unicorn Digit Insurance has set a price band in the range of INR 258 to INR 272 per equity share for its upcoming initial public offering (IPO), which is opening for bids next Wednesday (May 15).

At the upper price band, the startup is expected to raise a total of INR 2,614.6 Cr. Digit Insurance’s IPO comprises a fresh issue of shares worth INR 1,125 Cr and an offer for sale (OFS) component of 5.47 Cr shares.

Digit Insurance has reserved 75% of the shares in the public issue for qualified institutional buyers (QIBs), 15% for non-institutional institutional investors (NIIs), and 10% for retail investors.

The bids for its IPO will close on May 17 and the company is eyeing to get listed on the BSE and NSE by the end of this month, on May 23.

Founded in 2017 by Kamesh Goyal, Digit offers insurance policies across verticals like health, motor vehicle, travel, property, and more. The startup counts investors, including cricketer Virat Kohli and actor Anushka Sharma, and marquee investors Fairfax and Peak XV.

Digit Insurance plans to use the net proceeds from the IPO towards the maintenance of its solvency ratio in the financial year ending March 31, 2025 (FY25).

Speaking at a conference announcing its IPO, founder Goyal said, “In insurance, we have to maintain solvency margin… the minimum solvency ratio is 150% that insurance companies need to maintain. As of December 31, we are at about 160%. With this capital raise, my sense is that, by May 31, we should cross 200% solvency ratio.”

“From the company perspective, in terms of AUM, cash flow, etc., we have enough money otherwise to invest either in product or tech,” Goyal added.

It is pertinent to note that Digit Insurance has reduced its IPO size significantly. Earlier, as per its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI), the IPO comprised a fresh issue worth INR 1,250 Cr and an OFS component of 10.94 Cr equity shares.

Digit Insurance first filed its draft papers for the IPO in August 2022. Soon after, SEBI put its IPO in ‘abeyance’.

The market regulator had raised certain concerns about the company’s employee stock appreciation plans, which Digit Insurance addressed later and refiled a DRHP in March 2023.

In March this year, SEBI approved its DRHP.