Digit Insurance has achieved a valuation of $3.5 billion with its latest fundraising round of $200 million from existing investor Faering Capital and some new ones like Sequoia Capital India and IIFL Alternate Asset Managers. The investment is subject to regulatory approvals.
The company which is backed by Canadian billionaire Prem Watsa said with this round of funding, the total capital infusion into Digit has crossed Rs 3,000 crore. The fundraising follows a 44% growth in premium to Rs 3,243 crore. Insurance companies need to set aside capital for solvency in proportion to the business they write.
The company counts TVS Capital Funds, A91 Partners, and Virat Kohli among investors. The latest fundraising will result in a 5% dilution in the company's equity.
Digit Insurance chairman & founder Kamesh Goyal said: “We are humbled by the confidence shown by existing investor Faering Capital and the new investors. We will continue to focus on increasing insurance penetration and simplifying processes through technology.”
Motor insurance is the largest business segment, accounting for around 75% of the company's premium income. Digit's digital platform allows the company to ramp up its business without a corresponding increase in operating costs. This also enables it to do significantly higher business in smaller towns, where insurance distribution infrastructure is not developed. In the first two months of the current fiscal, Digit managed to grow premium by 70%, which is more than four times the 17% growth recorded by the industry.
Among listed non-life companies, ICICI Lombard has a market capitalisation of Rs 70,596 crore ($9.5 billion). Public sector New India Assurance — the largest non-life insurer in the country — is valued at Rs 28,254 crore. Last month, HDFC Bank acquired 3.6 crore shares (4.99% stake) in HDFC Ergo General Insurance for Rs 1,906 crore, valuing the company at over Rs 38,000 crore ($5.3 billion).
Prem Watsa, Chairman, Fairfax Financial holdings, the first investor in Digit Insurance, said, “It was a difficult year for economies the world over but I am glad to see Digit continuing to stick to its mission of simplicity and growing ahead of the industry. Their relevant products, tech-enabled, simple processes and customer-centric approach sets them apart. My best wishes to the team.”
