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    LICI   INE0J1Y01017


Delayed NSE India Stock Exchange  -  07:25 2022-06-24 am EDT
661.65 INR   -0.53%
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Exclusive-India's Digit Insurance targets $5 billion in IPO valuation - sources

05/25/2022 | 04:10am EDT
FILE PHOTO: People stand outside the Bombay Stock Exchange (BSE), after Sensex surpassed the 60,000 level for the first time, in Mumbai

MUMBAI (Reuters) - India's Digit Insurance, backed by Canadian billionaire Prem Watsa's Fairfax Group, is considering raising about $500 million in an initial public offering at a valuation of $4.5 billion to $5 billion, three people aware of the matter told Reuters.

Founded in 2017, Digit is trying to capitalise on India's under-penetrated general insurance market along with users' need for a better customer experience like easier claim settlements, though IPOs in the country have not done well in the past few months.

Digit has appointed Morgan Stanley and Indian investment bank ICICI Securities as bookrunners for the deal. It plans to file its draft documents to the markets regulator by September and list by January, said the people, who sought anonymity as they were not authorised to talk to the media.

A spokesperson for Digit declined to comment on "speculation". ICICI too declined to comment while Morgan did not respond to emails seeking comment.

Digit was valued at close to $4 billion earlier this month when it raised a tranche of funding. It has so far raised more than $400 million from Sequoia Capital, A91 Partners and Faering Capital, besides Fairfax.

India's biggest public offering - of state-owned Life Insurance Corp - dropped 7.8% on debut this month after it raised $2.7 billion, far less than its original plan of $12 billion. Fintech firm Paytm also plunged on its debut last November following a $2 billion IPO.

Indian start-ups also have found it difficult to raise money privately this year after a boom in 2021.

India's insurance regulator requires companies in the sector to be at least five years old before going public, which Digit will fulfil by September. Digit plans to raise money by offering new shares along with Fairfax, its largest shareholder with about 30%, trimming its stake, the people said.

Fairfax could not immediately be contacted.

Digit founder Kamesh Goyal is a veteran of the insurance industry who worked with Germany's Allianz and headed its Indian joint venture. Indian cricket star Virat Kohli is an investor and its brand ambassador.

Non-life insurance penetration in India stood at only 0.94% in 2020/21, from 0.56% about 20 years ago, data from the Insurance Regulatory and Development Authority of India shows.

Digit has served more than 20 million customers across car, bike, health and travel insurance, as per its website.

Its revenue surged 62% to about $675 million in the last fiscal year, outpacing the industry's 11% increase. The company recorded a net loss of $7.8 million on revenue of $309 million in 2020/21, but its latest profit or losses could not immediately be ascertained.

Digit is among India's few startup unicorns - a term for companies valued at more than $1 billion - which is profitable or close to profitability, one of the people said.

Bankers say that demand for Digit's IPO will depend on how it prices its shares, in addition to macroeconomic factors. Inflation fears and rising interest rates are weighing on IPO demand in India and abroad.

"Digit is growing fast, so by the time they start talking to IPO investors, the $4 billion valuation will seem outdated," one banker said. "Given they don't burn cash, it is an attractive proposition for institutional investors."

(Reporting by M. Sriram; Editing by Krishna N. Das and Stephen Coates)

By M. Sriram

© Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
ALLIANZ SE 1.23% 181.2 Delayed Quote.-12.74%
ICICI SECURITIES LIMITED 0.35% 436.05 Delayed Quote.-45.12%
LIFE INSURANCE CORPORATION OF INDIA -0.53% 661.65 Delayed Quote.0.00%
MORGAN STANLEY 5.20% 77.82 Delayed Quote.-20.72%
UNITED PARCEL SERVICE INC 2.61% 183.3 Delayed Quote.-14.48%
06/16Life Insurance Corporation Raises Stake in Dr. Reddy's Laboratories
06/16Life Insurance Corp. of India Lift Stake in Dr. Reddy's Laboratories to 5.65%
06/14Life Insurance Corporation Launches New Insurance Product
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06/12Zuari Agro Chemicals CFO Steps Down
06/10Indian shares set for weekly drop; tech stocks top drag for day
06/08Life Insurance Corp. of India Lifts Stake in Zee Entertainment Enterprises
06/03LIFE INSURANCE OF INDIA : Capacity addition/product launch
06/03Life Insurance Corporation of India Announces New Product Launch
05/31Life Insurance Corp. of India's Consolidated Net Profit Slides in Fiscal Q4
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Net income 2022
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Yield 2022
Capitalization 4 185 B 53 468 M 53 468 M
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EV / Sales 2023 0,50x
Nbr of Employees 108 987
Free-Float 100%
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