Axis and HDFC to acquire 9.94% equity stake each in Go Digit’s life insurance arm
- ByStartupStory | April 24, 2023
According to regulatory filings, two of India’s largest private lenders, Axis Bank and HDFC Bank, have signed definitive agreements to acquire a 9.94% equity stake each in the life insurance business of insurtech unicorn Go Digit, which is set to go public. HDFC had proposed an investment in August 2022, while Axis made the same proposal last September. The definitive agreements were signed on Friday, April 21st, as per regulatory filings made by the banks to the Bombay Stock Exchange (BSE).
Axis Bank and HDFC Bank have signed definitive agreements to invest up to INR 69.90 Cr each in Go Digit Life, the life insurance business of insurtech unicorn Go Digit, in two tranches. The banks will make an initial subscription of INR 10.93 Cr in the first tranche to acquire a stake in the company, with the option to invest the remaining INR 58.97 Cr later. The banks and their subsidiaries may engage in business dealings with Go Digit Life at an arm’s length basis, according to the regulatory filing. However, Go Digit Life must receive a life insurance license from the Insurance Regulatory and Development Authority (IRDAI) before this investment can be made. ACKO, Go Digit’s competitor, received a license in March 2023.
Axis Bank and HDFC Bank have stated in their regulatory filings that the first tranche of their investment in Go Digit Life, the life insurance business of insurtech unicorn Go Digit, will be completed within three to six months after the company receives its life insurance license. However, obtaining the license may not be easy for Go Digit due to several reasons. Firstly, the Insurance Regulatory and Development Authority of India (IRDAI) had disclosed at its previous meeting that it has nearly 20 other companies in the pipeline, which may cause delays in the approval process.
Insurtech unicorn Go Digit has been in a standoff with India’s Insurance Regulatory and Development Authority (IRDAI) over a recent rule that imposes a longer lock-in period for its stakeholders in case it proceeds with the planned listing. As Go Digit refiled papers with the Securities and Exchange Board of India (SEBI) for its $440m public issue, Axis Bank and HDFC Bank have signed definitive agreements to invest up to INR 69.90 crore each in Go Digit’s life insurance business, Go Digit Life, subject to it receiving a life insurance licence from IRDAI.
However, with IRDAI reportedly having around 20 companies in the pipeline for approval, the licence might be delayed significantly. Founded in 2017, Go Digit offers insurance policies for health, motor vehicle, travel, property, and more, with FY22 loss widened by 141% YoY to INR 295.8 crore, while operating revenue increased to INR 5,267.6 crore from INR 3,243.4 crore in FY21.
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