Go Digit Insurance Resolves Employee Stock Plan Issues, Submits Revised Draft Prospectus for $440 Million IPO
- ByStartupStory | March 31, 2023
According to Reuters, Go Digit Insurance, backed by Fairfax, has submitted a revised draft prospectus for its initial public offering (IPO) worth $440 million after resolving the concerns raised by the market regulator regarding the company’s employee stock plans, which had caused delays in the offering process.
In August 2022, Go Digit Insurance, a unicorn in the insurance technology sector and backed by Canadian billionaire Prem Watsa’s Fairfax Group and TVS Capital Funds, had submitted its draft red herring prospectus (DRHP) to the Securities and Exchange Board of India (SEBI) to raise capital through an initial public offering (IPO).
Digit, the insuretech unicorn that has received funding from Fairfax Group and TVS Capital Funds, had submitted a draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) in August 2022 to raise funds through an initial public offering (IPO). However, on January 30, SEBI returned the papers due to an issue with the Issuance of Capital and Disclosure Requirements (ICDR) rules, which did not exempt employee stock appreciation rights from being disclosed in the draft prospectus, unlike employee stock option plans. This issue has now been addressed, according to a statement by Digit.
SEBI’s letter found Digit ineligible for an IPO due to its employee stock appreciation rights scheme, which allowed employees to receive bonuses based on the company’s stock price increase over a specific period, which is prohibited for public companies under Indian regulations. However, Digit has since confirmed that it is reviewing its stock appreciation rights scheme to comply with SEBI’s requirements. Go Digit’s planned IPO consists of a fresh equity share issuance worth Rs 1,250 crore and an offer for sale of 10.94 crore equity shares by existing shareholders and a promoter, respectively.
According to the initial public offering (IPO) draft papers, Go Digit Insurance plans to use the funds raised for increasing its capital base, maintaining solvency levels, and for general corporate purposes. The insuretech unicorn provides insurance services across various segments such as motor, health, travel, property, and marine, among others. Sequoia Capital last valued the company at $3.5 billion, and it has investors including cricketer Virat Kohli and his wife, actor Anushka Sharma.
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