"We took investor feedback to decide the IPO price, hope to give them value," says Kamesh Goyal of Go Digit

"We took investor feedback to decide the IPO price, hope to give them value," says Kamesh Goyal of Go Digit

Regarding the smaller offering size, the chairman said that the company's capital needs decreased as a result of its December 2018 sale of Rs 200 crore in non-convertible debentures.

Chairman of the GoDigit Group of Insurance Companies, Kamesh Goyal

Go Digit General Insurance Chairman Kamesh Goyal said that the business chose to reasonably price the issue based on suggestions from investment bankers and investor comments as it prepares for an initial public offering.

According to Goyal, a number of variables have been taken into account while pricing the issue fairly so that investors would get a respectable return.

"Companies that are arriving now are arriving at a reduced value. The lenders recommended this range of prices. Clients or prospective small-scale investors need to feel content. We gathered comments from investors. In addition, we would want to leave a value for the investor unclaimed," he said during a Mumbai pre-IPO conference.

Beginning in 2021, a number of Indian startups—Paytm, Zomato, Policybazaar, CarTrade, Nykaa, and Delhivery—joined the frenzy of initial public offerings (IPOs).

But most of them suffered a battering in the stock market and stayed below their issue price for a while before turning things around. Other firms including Oyo Rooms, PharmEasy, and Mobikwik were also affected by this and had to postpone their plans for an initial public offering.

Next week, Go Digit General Insurance plans to list on the stock exchange in an attempt to raise Rs 2,614 crore after a series of setbacks related to noncompliance that caused delays in the clearance process for its IPO. August 2022 saw the company's first filing of draft documents for the IPO.

The company, sponsored by the Fairfax group and owned by Prem Watsa, has set its price band between Rs 258 and Rs 272 per share, with a face value of Rs 10.

The recent private round valued Digit at $3.58 billion (as of 2022-23). The firm is valued at somewhat less than $3 billion based on the issue price.

Instead of raising the Rs 1,250 crore in primary capital as originally intended, the insurtech company, which has reduced its issue by over 40%, is looking to raise Rs 1,125 crore.

Additionally, the offer for sale (OFS), which was valued Rs. 1489.62 crore, was reduced by almost 50%, from 109.4 million shares to 54.8 million shares.

An OFS is usually used to let current investors to sell their shares and realize profits, while the main money generated is utilized to support the company operations and development.

Important performance indicator Digitize General Insurance

The Chairman said, "Our primary offering was Rs 1250 crore initially," in reference to the smaller issue size. due to the delayed IPO, we were able to obtain Rs 200 crore in non-convertible debentures. Consequently, we needed less money overall.

According to the RHP, on December 11, 2023, the Board of Directors authorized capital raising via the private sale of Non-Convertible Debentures (NCDs) up to Rs 2,000 million (Rs 200 crore).

longer time to gestation

Goyal reiterated the growth figures for the previous six years and said that the firm has achieved profitability, despite the fact that the insurance industry usually takes longer to reach the same level of profitability.

"Over the years, our health insurance business has doubled." When everyone was losing, the ratio of wins to losses was favorable. In a single year, we quadrupled our premium. It will be our segment with the fastest growth in three years, according to Goyal.

In addition to other well-known competitors, Digit faces competition from companies like Acko, which reported sales of Rs 1,759 crore with a loss of Rs 738 crore in FY23. Digit reported an operational loss of Rs 10 crore for the nine months ending in December 2023, down from Rs 57 crore the previous year, despite having a larger revenue of Rs 5,164 crore.

"At the operational level, this loss is negligible and has no effect on the services we provide. Since retail makes up the majority of our company, costs will be significant. Our AUM over the previous six years has exceeded 15% of some of the top five corporations, according to Goyal.

"When you are growing quickly, it results in losses because your commission expenses must be paid for on day one while revenue is generated over a 365-day period," he said.

Not less than 75% of the shares in the public offering of Go Digit General Insurance have been set aside for qualified institutional buyers (QIB), not more than 15% for non-institutional institutional investors (NII), and not more than 10% of the offer has been set aside for retail investors.