Fairfax-backed Go Digit Insurance has re-filed draft papers for a $440 million initial public offering (IPO) after addressing the market regulator’s concerns related to the company’s employee stock plans, which had stalled the offering for months, news agency Reuters reported.
The insuretech unicorn, which counts Canadian billionaire Prem Watsa’s Fairfax Group and TVS Capital Funds among its backers, first filed for draft red herring prospectus (DRHP) in August 2022 with Securities Exchange Board of India to secure funds via IPO. However, it stalled due to compliance problems related to share issuances.
The IPO comprises a fresh issue of shares worth Rs 1,250 crore and an offer for sale (OFS) of 10.94 crore equity shares by a promoter and existing shareholders. In the OFS, Go Digit offers to sell 10,94,34,783 equity shares, according to the draft prospectus тАУ unchanged from its last filing тАУ dated March 30.
The IPO also faced another setback in January 2023 after SEBI raised certain compliance issues related to employee stock plans in a private letter. The papers were returned тАЬowing to ICDR (Issuance of Capital and Disclosure Requirements) rules, which exempts rights granted under employee stock option plans to subsist at the time of filing the draft prospectus, but does not similarly exempt employee stock appreciation rights,тАЭ Digit had said in a statement.┬а
Digit told Reuters in January it was evaluating amendments to its employee stock appreciation rights scheme after receiving SEBI’s letter.
Such rights provided by the company enabled an employee to receive a bonus equivalent to the rise in the company’s stock price over a certain period, which Indian regulations prohibit for companies going public.
Due to this, Digit was found “not to be eligible for making an initial public offer”, according to SEBI’s letter.
The IPO would be on hold until the company changed its employee stock rights to stock option plans and refiled papers with the regulator, Reuters reported.
Go Digit’s latest filing shows it has changed its employee stock rights to stock option plans after approving the plan through a special resolution on March 27.
The company, last valued at $3.5 billion by Sequoia Capital, provides general insurance services. Cricketer Virat Kohli and his wife and actor Anushka Sharma are among the investors in the firm.
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