Digit

[jeyfox]

I will put it here rathen then in the Fairfax annuel letter 2023.

Digit max ownership will be 68% against 74% (in 2022 letter).

 

[nwoodman]

https://irdai.gov.in/life

 

Digit Life 426 Crore => $US51m in premiums.  License granted June 2023

 

31.03.2024 को जीवन बीमाकर्ताओं का प्रथम वर्ष का प्रीमियम _ First year premium of Life Insurers as at 31.03.2024.xlsx

Edited April 23, 2024 by nwoodman

[Hoodlum]

That is interesting.  So a 2% market share in just 9 months.

[Hoodlum]

IPO is expected on the 15th next week, with IPO range announcement coming in 2 days.  
 

https://www.businesstoday.in/amp/markets/ipo-corner/story/virat-kohli-backed-go-digit-may-launch-ipo-next-week-here-are-key-details-428682-2024-05-08

 

Go Digit General Insurance is looking to launch its initial public offering (IPO) next week, likely on Wednesday, May 15, 2024, said a report from ET Now. The company price band of the issue will be declared on Friday, May 10 and the anchor book may open on Tuesday, May 14.  

Edited May 8, 2024 by Hoodlum

[nwoodman]

31 minutes ago, Hoodlum said:

IPO is expected on the 15th next week, with IPO range announcement coming in 2 days.  
 

https://www.businesstoday.in/amp/markets/ipo-corner/story/virat-kohli-backed-go-digit-may-launch-ipo-next-week-here-are-key-details-428682-2024-05-08

 

Go Digit General Insurance is looking to launch its initial public offering (IPO) next week, likely on Wednesday, May 15, 2024, said a report from ET Now. The company price band of the issue will be declared on Friday, May 10 and the anchor book may open on Tuesday, May 14.  

Cheers, big news if true.  Here is the source

 

 

[SafetyinNumbers]

I’m a bit rusty on where Digit is marked on Fairfax’s books.

 

i think most of the value is being marked on the convertible preferred despite most of the ownership being through the common equity. 
 

[Thrifty3000]

If Digit IPOs at $4 bil what will the impact be to FFH’s BV?

[MMM20]

Do we have a ticker!?

[Hoodlum]

Fairfax has GO digit listed as 49% ownership in their shareholders letter.  But it looks like Fairfax was able to covert their debt to shares in advance of the IPO.  IRDA did fine them yesterday ~$120k for non-disclosure of a change to how they were converted but it looks like it went through.  This was likely the last step before going ahead with the IPO.  
 

I still don’t see what Fairfax ownership will look like after the IPO but they will likely have majority ownership as this was a key component of the IPO for Fairfax. I would expect that Fairfax will issue a press release after the IPO announcing their new ownership share of Go Digit  along with the impact on Book Value. 

 

https://www.indiainfoline.com/news/business/irdai-penalizes-go-digit-insurance-with-1-crore-for-non-disclosure-of-ccps-change

Edited May 8, 2024 by Hoodlum

[Thrifty3000]

Back of the envelope:

 

In the annual report it looks to me like FFH is valuing/carrying their Digit holdings at around $2.2 to $2.3 billion.

 

If FFH owns 58% of Digit after the IPO and if Digit’s market cap is around $4.5 billion then the IPO will increase FFH’s BV per share by around $15 pre-tax.

 

 

[gfp]

8 minutes ago, Thrifty3000 said:

Back of the envelope:

 

In the annual report it looks to me like FFH is valuing/carrying their Digit holdings at around $2.2 to $2.3 billion.

 

If FFH owns 58% of Digit after the IPO and if Digit’s market cap is around $4.5 billion then the IPO will increase FFH’s BV per share by around $15 pre-tax.

 

 

 

That's right, they are carrying the 49% (pre-IPO percentage) equity at $152.2 million USD and they are carrying the compulsory convertible pref. shares at approximately $2.092 Billion.  If completely converted (regulatory approval needed), this would result in Fairfax owning 68% of Digit (pre-IPO percentage).  It looks like the IPO will dilute them slightly and they may choose to sell a few shares in the IPO - I have no idea.

[dartmonkey]

Can someone explain to me how 49% of the equity is only worth $152m (carrying value)? Or only worth $476m ('fair value', according to the Q1 report.) It clearly can't be that $2.092b worth of preferreds will only convert to an addition 19% of the equity. Explain it to me like I'm an 8-year old.

[nwoodman]

Double points for a link either on the Digit Website, SEBI or the BSE/NSE to the IPO.  I had a quick look but no joy from my quick search

[smed]

10 hours ago, Haryana said:

Rs.1500cr is total out of which Rs.1250cr is fresh and Rs.250cr is existing equity from promoters.
They are saying that count of existing equity offered for sale is ~11cr shares, thus ~Rs.23/share.

The price is not known yet. Each share is nominal Rs 10, and the Rs 1250cr is the nominal amount of the maximum fresh share capital. Ie. *up to* 1,250m new shares on offer and up to 109m existing shares on offer. Presumably, the price band will be public tomorrow (India time). Actual ipo price next week.

 

Here is link to a site mentioning the expected price band as Rs258 to Rs265 Per Share (nominal Rs10):

https://ipowatch.in/go-digit-insurance-ipo-date-review-price-allotment-details/

(I dont know if it can be trusted)

 

 

See also FAQs here:

 https://groww.in/ipo/godigit-insurance-ipo

 

and here:

https://www.angelone.in/ipo/go-digit-insurance-ipo

[Hoodlum]

It looks like the actual listing date is May 23rd. 

 

https://www.freepressjournal.in/amp/business/go-digit-on-the-block-virat-kohli-anushka-sharma-backed-company-to-issue-ipo-on-15-may

The IPO comprises of a fresh issue of Rs 1125 crores. On offer sale is up to 109,445,561 equity shares. Each of these equity shares is worth Rs 10. 

The IPO will close on 17 May. The company will be listed on both National Stock Exchange and the Bombay Stock Exchange. In this, 10 per cent will be earmarked for Retail Quota. 75 per cent will be earmarked for QIB or Qualified institutional investors. In addition, 15 per cent will be for NII or Non-Institutional investors. 

 

After closing of the IPO, refunds will be arranged on 22 May. The shares would be credited to the account on 22 May. Finally, the IPO will be listed on 23 May.

[smed]

1 hour ago, nwoodman said:

Double points for a link either on the Digit Website, SEBI or the BSE/NSE to the IPO.  I had a quick look but no joy from my quick search

I couldn't find any official info for verification either - somewhat dubious..

[gfp]

3 hours ago, nwoodman said:

Double points for a link either on the Digit Website, SEBI or the BSE/NSE to the IPO.  I had a quick look but no joy from my quick search

 

The most recent filing on SEBI is from May 8, 2024 - attached below.  This is a 'red herring' prospectus, what we also call a preliminary prospectus.  The filings before this one were also IPO related, from April 2023 and November 10, 2023.

 

Red Herring attached as pdf

1715254865991.pdf

[gfp]

The earlier versions from 2023 contemplated selling almost twice as many shares. 1699616304302.pdf1680765082765.pdf One of these attached files is the original 2023 preliminary prospectus and the other is the "addendum" to that prospectus, filed in November, when they explained how they got in trouble for changing a conversion ratio without fully notifying everyone they were required to.  This is the recently resolved matter, slap on the wrist, whatever.  

[gfp]

The final prospectus will show up at this link when it is final:

https://www.sebi.gov.in/sebiweb/home/HomeAction.do?doListing=yes&sid=3&ssid=15&smid=12

[Hoodlum]

Some more details of the IPO price range.   This would suggest they are raising ~$310M US, if my calculation is correct.  Not sure how this translates to total valuation of Go Digit. 
 

https://www.moneycontrol.com/news/business/ipo/go-digit-ipo-price-band-likely-to-be-rs-258-272-per-share-total-issue-size-may-be-around-rs-2600-cr-12718739.html/amp

 

The price band of the public offer is expected to be around Rs 258-272 per share and the company is likely to raise Rs 2,538 crore at the lower end of the price band and Rs 2,614 crore at the upper band, sources aware of the matter told Moneycontrol on the condition of anonymity.

Edited May 9, 2024 by Hoodlum

[Haryana]

https://www.godigit.com/investor-relations/view-rhp#disclaimerModal

Disclaimer

THESE MATERIALS ARE NOT DIRECTED AT OR INTENDED TO BE ACCESSED BY PERSONS LOCATED OUTSIDE INDIA. THESE MATERIALS ARE BEING MADE AVAILABLE ON THIS WEBSITE TO COMPLY WITH SECURITIES AND EXCHANGE BOARD OF INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2018, AS AMENDED.

IMPORTANT: You must read and agree with the terms and conditions of the following disclaimer before continuing.

The following disclaimer applies to the Red Herring Prospectus dated May 8, 2024 (“RHP”) of Go Digit General Insurance Company Limited (the “Company”) filed with the Registrar of Companies, Maharashtra at Pune and subsequently with Securities and Exchange Board of India (“SEBI”), BSE Limited and National Stock Exchange of India Limited (collectively, the “Stock Exchanges”), in relation to the initial public offering of the equity shares of face value of ₹ 10 each (“Equity Shares”) of the Company (“Offer”) and hosted on this website. In accessing the RHP, you agree to be bound by the following terms and conditions, including any modifications to them from time to time.

The RHP are directed at, and is intended for distribution to, and use by, residents of India only. The information in this portion of our website, including the RHP, are not for publication or distribution, directly or indirectly, in or into the United States. No part of the contents of the RHP shall be copied or duplicated in any form by any means, or redistributed.

...

Any person into whose possession the RHP comes is required to inform himself or herself about and to observe any such restrictions. Neither the Company nor any of its affiliates is soliciting any action based on the RHP, and it should not be construed as an offer to sell or the solicitation of an offer to buy any securities. Potential investors should not rely on the RHP for any investment decision. The Offer and sales of the Equity Shares to be offered in the Offer shall be made only pursuant to the Red Herring Prospectus (when available).

...

 

[nwoodman]

@Haryana Good stuff!

[SafetyinNumbers]

It seems like FFH has marked its stake in Digit at ~US$1.9b being the sum of the compulsory preferred fair value and the common carrying value. If the IPO is being done at Rs 272 or ~US$3.25 at prevailing exchange rates and the pre-IPO share count is ~875m, then the pre raise market cap is ~US$2.85b. I recall seeing somewhere FFH had a 68% stake which means we wouldn’t see much of a gain on listing as that works out to ~US$1.9b.

 

Does that make sense? 

 

If anyone has a better idea please share! I’m trying to understand how this all plays out for book value in Q2.

[nwoodman]

18 minutes ago, SafetyinNumbers said:

It seems like FFH has marked its stake in Digit at ~US$1.9b being the sum of the compulsory preferred fair value and the common carrying value. If the IPO is being done at Rs 272 or ~US$3.25 at prevailing exchange rates and the pre-IPO share count is ~875m, then the pre raise market cap is ~US$2.85b. I recall seeing somewhere FFH had a 68% stake which means we wouldn’t see much of a gain on listing as that works out to ~US$1.9b.

 

Does that make sense? 

 

If anyone has a better idea please share! I’m trying to understand how this all plays out for book value in Q2.

It does but the good news is we are about to find out .  

 

If this goes full fintech then I would expect at least a $3.5bn market cap (4x’sGWP).  Their 68% gets marked at $2.4bn.  Your guess is as good as mine though.  

 

The only thing I can say with reasonable confidence is that Digit is likely to be worth a lot more than the current carrying value in 10 years time

 

 

Key Dates:

1. Bid/Offer Opening Date: Wednesday, May 15, 2024
2. Bid/Offer Closing Date: Friday, May 17, 2024
3. Finalisation of Basis of Allotment: On or about Tuesday, May 21, 2024
4. Initiation of Refunds/Unblocking of Funds: On or about Wednesday, May 22, 2024
5. Credit of Equity Shares to Depository Accounts: On or about Wednesday, May 22, 2024
6. Commencement of Trading on the Stock Exchanges: On or about Thursday, May 23, 2024 .

 

 

 

[lathinker]

Thanks for the work you are doing. I tried to find out the value from the prospectus and looked at the section "Our Promoters and Promoter Group" which shows "Go Digit Infoworks Services Private Limited" (GDISPL) will hold 729,565,220 shares. This is the Fairfax / K. Goyal vehicle.

 

Then, looking at the shareholding for GDISPL, it shows that Fairfax Asia Limited (FAL) owns 45.25% of the equity in GDISPL plus all the CCPs. If I read it correctly, the CCPs can be converted into 3.133m shares of GDISPL, bringing the FAL stake in GDISPL to 86.5%.

 

No my math for the Fairfax stake in Digit would be: 86,5%*729,565,220 Digit shares*3.25$/Digit shars = 2,050m USD