HDFC Bank picks stake in Virat Kohli backed Go Digital Insurance

India’s most valuable bank by market cap and largest private sector bank by size, HDFC Bank will invest Rs49.9 crore to Rs69.9 crore in two tranches to acquire a 9.94% equity stake in the company. Apparently, the bank has entered into an indicative and non-binding term sheet with Go Digit Life Insurance. The two will jointly offer insurance products in India but that will be subject to the approval of the Insurance Regulatory and Development Authority of India (IRDAI). In India, prior approval of IRDAI is required for selling insurance solutions.

 
For the two companies it would be a synergistic move, even though HDFC Bank is infinitely larger in terms of size. Most Indian banks have struggled to adapt to the new fintech model and still look at Fintech as a major competition to the banks. Banks like HDFC Bank are looking at Fintechs more as an opportunity to learn to live in the emerging paradigm of banking. Globally, the banking industry is rapidly being challenged by the Fintechs and banks are literally falling over each other to tap this huge potential. HDFC Bank is on track.

Go Digit General Insurance Ltd is backed by Fairfax Group of Canada. The Fairfax group was founded by Prem Watsa and has one of the top investors in Indian assets. Go Digit Insurance is also backed and supported by Virat Kohli, India’s foremost sporting couple. Go Digit is also planning to come out with an initial public offer and for that it has already has filed draft red herring prospectus (DRHP) with SEBI. The dates of Go Digit IPO would be decided upon post the approval coming in from SEBI. 

The proposed IPO by Go Digit will entail the issue of fresh shares to the tune of Rs1,250 crore combined with an offer-for-sale (OFS) of 10.94 crore equity shares by early investors and the promoter group. Under the terms of the offer for sale (OFS), Go Digit Infoworks Services will sell the entire 10.94 crore equity shares. As of now, the company may also consider a pre-IPO placement of shares up to Rs250 crore. If it is successful, then the size of the IPO would be reduced proportionately to the extent of the private placement done.

In terms of the palate of offerings to the consumers, Go Digit Insurance offers motor insurance, health insurance, travel insurance, property insurance, marine insurance, liability insurance and a host of other insurance products, to meet the unique and specific needs of the customers. Go Digit has the distinction of being one of the first and only non-life insurers in India, that totally operates on the cloud and has already developed application program interface (API) integrations with channel partners. Valuations may be a concern.