Eager For A Public Listing, Go Digit Questions New IRDAI Rules

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Go Digit Insurance, an insurtech startup backed by Sequoia, A91, TVS Shriram and Canadian investor Fairfax, has written to the Insurance Regulatory and Development Authority (IRDAI) seeking clarity on new insurance rules that could affect its IPO plans. The rules would subject Go Digit Insurance’s existing investors to a two-year lock-in period if there is a major change in the company’s capital structure, in case its IPO plans materialize. While the startup received IRDAI’s nod to go public before the rules came into effect, it is unclear whether it will be exempt from the new lock-in criteria. The circular was formulated to prevent the misuse of new rules, which increased the threshold for promoters to the ones who own a 25% stake in a company as against 10% in the previous regime. The increased lock-in requirements were brought in to balance this relaxation and curb any misuse. Go Digit’s IPO plans have already been delayed after market regulator Securities and Exchange Board of India (SEBI) put its IPO in abeyance and sent back the offer documents earlier this year. According to its DRHP, Go Digit’s proposed offering includes a fresh issue worth INR 1,250 Cr and an offer for sale (OFS) element of 10.94 Cr equity shares. The startup plans to deploy the proceeds from the debut to expand operations and increase its capital base.  According to the Draft Red Herring Prospectus (DRHP) filed by Go Digit, the insurtech giant’s proposed IPO will consist of a fresh issue of shares worth INR 1,250 crore ($167.8 million) and an offer for sale (OFS) of 10.94 crore equity shares by existing shareholders. The company plans to use the proceeds from the IPO to expand its operations and increase its capital base.