New age insurer Go Digit General Insurance, is one of the leading digital full-stack insurance companies, leveraging its technology to power what they believe to be an innovative approach to product design, distribution and customer experience for non-life insurance products have filed its Draft Red Herring Prospectus (DRHP) with the markets regulator, Securities and Exchange Board of India (SEBI), to raise funds through an initial public offering (IPO).
The public issue consists of a fresh issue of equity shares worth up to Rs 1250 crore and an offer-for-sale (OFS) up to 109,445,561 equity shares by Promoter and selling shareholders, which comprises up to 109,434,783 Equity Shares by Go Digit Infoworks Services Private Limited, up to 4,000 Equity Share by Nikita Mihir Vakharia, jointly with Mihir Atul Vakharia, up to 3,778 equity shares by Nikunj Hirendra Shah, jointly with Sohag Hirendra Shah, up to 3,000 equity shares Subramaniam Vasudevan, jointly with Shanti Subramaniam ("Selling Shareholders").
The Offer is being made through the Book Building Process, wherein at least 75% of the Offer shall be available for allocation to Qualified Institutional Buyers, not more than 15% of the Offer shall be available for allocation to Non-Institutional Bidders, and not more than 10% of the Offer shall be available for allocation to Retail Individual Bidders.
Additionally, the company in consultation with merchant bankers to the issue may consider a pre-IPO placement of equity shares, or any other method aggregating up to Rs. 250 crores. If such placement is completed, the fresh issue size will be reduced.
The proceeds from its fresh issuance are worth Rs. 1250 crore and will be utilized for the augmentation of the company's capital base and maintenance of solvency levels and general corporate purposes.
Go Digit offers motor insurance, health insurance, travel insurance, property insurance, marine insurance, liability insurance, and other insurance products, to meet the needs of the customers. According to a company commissioned report mentioned in the DRHP, it is one of the fastest growing insurers among the top 10 private general insurers by Gross Written Premium (GWP) during the pandemic in Fiscal 2020 and Fiscal 2021.
The Bengaluru-based company is one of the first non-life insurers in India to be fully operated on the cloud and has developed application programming interface (API) integrations with several channel partners, with 1,063 API integrations with partners and 16.57 million policies issued by partners with API integrations since inception to March 31, 2022.
The New Age Insurer's business model focuses on making it simpler for its customers to understand the products and to customize those products to fit their needs and budgets. It leverages front-end technology that the customers are familiar with to make it easier for them to file and check on the status of claims. On the back end, it deploys software developed in-house to speed up underwriting and claims processing times. It also collects and deploys data to help and understand its customers and to mitigate claims risks.
The company has an established track record of delivering growth. GWP stood at Rs 52.68 billion, Rs 32.43 billion, and Rs 22.52 billion in Fiscals 2022, 2021, and 2020, with a CAGR of 52.9% from Fiscal 2020 to Fiscal 2022. The company's net expense ratio has decreased from 42.4% for Fiscal 2020 to 35.4% for Fiscal 2021 and 38.7% for Fiscal 2022, highlighting operating leverage in their business model. The company has a strong capital position with a solvency ratio of 2.01 times as of March 31, 2022, compared to the IRDAI level minimum solvency ratio guidance of 1.50 times. The policies issued for Fiscal 2022 stood at 7759.43 thousand against 5557.55 thousand in Fiscal 2021.
The company's Asset Under Management (AUM) increased 68% from Rs 55,901.11 million in Fiscal 2021 to Rs 93,938.75 million in Fiscal 2022, primarily due to an increase in GWP and additional capital infusion from share issuances with gross proceeds of Rs 10,265.32 million. The GDPI increased from Rs 24,176.20 million in Fiscal 2021 to Rs 46,739.41 million in Fiscal 2022, an increase of 93.3%.
As of FY2022, the GDP for India was approximately US$ 3.38 trillion and the non-life insurance market was US$ 31.87 billion measured by GDPI. This indicates a non-life insurance penetration rate of 0.9% with significant room for improvement. According to the IRDAI, Indian non-life insurance contributed around US$32.82 billion in GWP in Fiscal 2022, showing a CAGR of 15.3% from Fiscal 2016 to Fiscal 2021. The overall market is estimated to grow at a CAGR of 12.3% from Fiscal 2021 to Fiscal 2026, reaching the value of ~US$52.70 billion in Fiscal 2026.
ICICI Securities Limited, Morgan Stanley India Company Private Limited, Axis Capital Limited, Edelweiss Financial Services Limited, HDFC Bank Limited, and IIFL Securities Limited are the book running lead managers and Link Intime India Private Limited is the registrar to the offer. The equity shares are proposed to be listed on BSE and NSE.