Digit

[nwoodman]

I see the price band being reported at 258-272 rupees.  I have searched through the red herring prospectus any reference to this price band is just a black circle.  Not sure if there is something funky going on with my pdf reader.  Can someone screen shot and upload a document that actually shows the floor and cap price as reported.  Thanks in advance

[gfp]

3 hours ago, nwoodman said:

 I have searched through the red herring prospectus any reference to this price band is just a black circle.  Not sure if there is something funky going on with my pdf reader.

 

That is what a 'red herring' preliminary prospectus is - a document with a bunch of blanked out sections because they haven't been solidified yet.  Even a reported range for the IPO price is subject to change based on demand.  272 INR per share seems low.  Even if they price the IPO at 272 it will probably open much higher.  There are "selling shareholders," however small, with cost basis of 250 INR / share.  

[gfp]

This article quotes the IPO price as being around $3 Billion USD, less than the last fundraising round.

 

https://www.moneycontrol.com/news/business/go-digits-kamesh-goyal-says-we-took-investor-feedback-to-decide-the-ipo-price-hope-to-give-them-value-12719353.html

[gfp]

I will just say that I have learned a lot about the Indian love for their cricket icon Virat Kohli through his name being included in virtually every mention of Digit on Indian financial media.  Being a resident of south Louisiana, United States, I was not up to date on famous cricketers and this guy sounds like the Michael Jordan of cricket.

[nwoodman]

7 minutes ago, gfp said:

 

That is what a 'red herring' preliminary prospectus is - a document with a bunch of blanked out sections because they haven't been solidified yet.  Even a reported range for the IPO price is subject to change based on demand.  272 INR per share seems low.  Even if they price the IPO at 272 it will probably open much higher.  There are "selling shareholders," however small, with cost basis of 250 INR / share.  

I get that, where is the actual prospectus that these articles are referring to?  I guess this is the first Indian IPO I have ever actually been interested in and it is bizarre.  

[gfp]

On 5/9/2024 at 7:22 AM, gfp said:

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

 

 

RE: "I get that, where is the actual prospectus that these articles are referring to?  I guess this is the first Indian IPO I have ever actually been interested in and it is bizarre.  "

Edited May 10, 2024 by gfp

[hasilp89]

1 hour ago, gfp said:

I will just say that I have learned a lot about the Indian love for their cricket icon Virat Kohli through his name being included in virtually every mention of Digit on Indian financial media.  Being a resident of south Louisiana, United States, I was not up to date on famous cricketers and this guy sounds like the Michael Jordan of cricket.

yup he's a legend, he's getting up there with Sachin Tendulkar and still has some years in him. He'll be in the states this summer. India vs. Pakistan tickets going for $1k+  . Definitely someone positive to have Digit's name identified with. 

 

one quick snapshot of what he does and then i'll be quiet.

 

 

 

 

Edited May 10, 2024 by hasilp89

[nwoodman]

9 minutes ago, gfp said:

 

 

RE: "I get that, where is the actual prospectus that these articles are referring to?  I guess this is the first Indian IPO I have ever actually been interested in and it is bizarre.  "

We must be on different planets or operating systems.  Screen shot and post if you are actually seeing what they are reporting.  Spoon feed me!

[gfp]

Just now, nwoodman said:

We must be on different planets or operating systems.  Screen shot and post if you are actually seeing what they are reporting.  Spoon feed me!

 

Did you read my post either time I posted it?  It will show up at that link when it is final.  Every word in a sentence is important.

[nwoodman]

Just now, gfp said:

 

Did you read my post either time I posted it?  It will show up at that link when it is final.  Every word in a sentence is important.

The point is where is the media getting their spread in terms of their pricing from now?  

[nwoodman]

5 minutes ago, nwoodman said:

The point is where is the media getting their spread in terms of their pricing from now?  

“Go Digit IPO sets Rs 258-272 per share price band; bids open on May https://www.business-standard.com/markets/ipo/go-digit-ipo-sets-rs-258-272-per-share-price-band-bids-open-on-may-15-124051000481_1.html

 

No problems if that is the case but  where are they getting that number from?  The only thing that is official has that number blanked out

 

[gfp]

The article I linked to above was quoting Kamesh Goyal so I would say that is a credible source.  This is all very similar to how a US IPO works.  Leaks and rumors about pricing, subject to change leading into the final announcement, IPO prices set a bit low to hopefully get a nice enthusiastic pop on day one, etc. etc..

[nwoodman]

2 minutes ago, gfp said:

The article I linked to above was quoting Kamesh Goyal so I would say that is a credible source.  This is all very similar to how a US IPO works.  Leaks and rumors about pricing, subject to change leading into the final announcement, IPO prices set a bit low to hopefully get a nice enthusiastic pop on day one, etc. etc..

OK, so absolutely nothing offical to fill in the black dots.  All I needed to know.  

[SafetyinNumbers]

36 minutes ago, gfp said:

The article I linked to above was quoting Kamesh Goyal so I would say that is a credible source.  This is all very similar to how a US IPO works.  Leaks and rumors about pricing, subject to change leading into the final announcement, IPO prices set a bit low to hopefully get a nice enthusiastic pop on day one, etc. etc..

They seem to have a liquid grey market and there seems to be a reliable grey market premium for those who get allocations to do a quick flip. 
 

This article suggests it’s trading above Rs 350 in the grey market.

 

https://thearcweb.com/article/go-digit-ipo-valuation-fairfax-prem-watsa-fyeU0WSqN1fQY2G6

[nwoodman]

@SafetyinNumbers. That's quite interesting.  To be honest as as much as I would like the sugar hit to book I would much prefer them to have a stellar IPO record in India i.e stag and long term.  Let Recipe, Farmers Edge and the like never be repeated.  You get it right in India in terms of raising capital and delivering and you have a Lollapalooza.

 

Edit:  Anchorage being next

Edited May 10, 2024 by nwoodman

[dartmonkey]

41 minutes ago, nwoodman said:

OK, so absolutely nothing offical to fill in the black dots.  All I needed to know.  

Apparently, they have announced the price range, today: 

 

The company announced a price range of Rs 258-272 on Friday, May 10, 2024.  Read more at: https://thearcweb.com/article/go-digit-ipo-valuation-fairfax-prem-watsa-fyeU0WSqN1fQY2G6

 

I don't know WHERE they announced it, but it doesn't seem to be just a rumour.

Edited May 10, 2024 by dartmonkey

[nwoodman]

21 hours ago, dartmonkey said:

Apparently, they have announced the price range, today: 

 

The company announced a price range of Rs 258-272 on Friday, May 10, 2024.  Read more at: https://thearcweb.com/article/go-digit-ipo-valuation-fairfax-prem-watsa-fyeU0WSqN1fQY2G6

 

I don't know WHERE they announced it, but it doesn't seem to be just a rumour.

No problems I would just love to know where

Edited May 11, 2024 by nwoodman

[Hoodlum]

Here on some additional comments from Kamesh Goyal on their decision to lower the IPO price.  They also decided to reduce number of shares on offer by 40%, as non-convertible debt secured in December has reduced the need for additional funding.  

 

https://www.moneycontrol.com/news/business/go-digits-kamesh-goyal-says-we-took-investor-feedback-to-decide-the-ipo-price-hope-to-give-them-value-12719353.html

 

Quote

As Go Digit General Insurance gears up for an IPO, Chairman Kamesh Goyal said the company decided to fairly price the issue as suggested by the investment bankers and feedback from the investors.

Goyal said multiple factors have gone into consideration to price the issue in a fair manner for it to leave reasonable value for the investors.

 

“People (companies) who are coming now are coming at a lower value. This (price range) is what bankers suggested. Customers or potential retail investors should be happy. We took investors feedback. Further, there is a value that we want to leave for the investor on the table,” he said during a pre-IPO meeting held in Mumbai.

The Prem Watsa’s Fairfax group-backed firm has fixed its price band in the range of Rs 258- 272 per share of the face value of Rs 10.

Digit was valued at $3.58 billion (as of 2022-23) in the last private round. The issue price values the company at a little less than $3 billion.
 

The insurtech firm, which has downsized its issue by more than 40 percent, is seeking to raise primary capital of Rs 1,125 crore instead of the earlier planned Rs 1,250 crore.
 

The offer for sale (OFS) has also been slashed by almost 50% from 109.4 million shares to 54.8 million shares (worth Rs 1489.62 crore).
 

While the primary capital raised is used to fund the business operations and expansion, the OFS is typically to allow existing investors to sell shares and realise profits.

 

On the reduced issue size, the Chairman said, “Our primary offering was Rs 1250 crore initially. Because IPO got delayed and we raised non-convertible debentures worth Rs 200 crore. So our overall requirement for capital went down.”
 

As per the RHP, the Board of directors on December 11, 2023, had approved raising of capital by issuance of Non-Convertible Debentures (NCDs) up to Rs 2,000 million (Rs 200 crore) on a private placement basis.

 

 

[dartmonkey]

2 hours ago, Hoodlum said:

We took investors feedback. Further, there is a value that we want to leave for the investor on the table,” he said during a pre-IPO meeting held in Mumbai.

The Prem Watsa’s Fairfax group-backed firm has fixed its price band in the range of Rs 258- 272 per share of the face value of Rs 10.

Digit was valued at $3.58 billion (as of 2022-23) in the last private round. The issue price values the company at a little less than $3 billion.
 

The insurtech firm, which has downsized its issue by more than 40 percent, is seeking to raise primary capital of Rs 1,125 crore instead of the earlier planned Rs 1,250 crore.
 

The offer for sale (OFS) has also been slashed by almost 50% from 109.4 million shares to 54.8 million shares (worth Rs 1489.62 crore).

 

I guess this might make for a 'successful' IPO, successful for investors at least, even if selling shares to the public below what someone might have paid for them is not usually what the other shareholders would want. At least it's not too dilutive, given that it is only selling about 42m shares, out of 874m shares outstanding, or a little less than 5% of the company. 

 

But if they are selling 40% less shares, at a lower per-share price, how can they expect to raise Rs 1125 instead of 1250 crore? If they sell at the middle of their target range, Rs 265/share, they would need to sell 42.45m shares to raise Rs 1,125 crore. If that represents a 40% cut in the number of shares, that would have been 70.75m shares they previously intended to issue. If they expected to raise Rs 1,250 crore, that means they intended to sell them at just Rs 177/share, which doesn't jive with the idea that they have marked down the price to get an IPO pop.

 

Anyways, most of these questions will be resolved in a week when we have a share price on the NSE and BSE.

[Matthew Lembo]

Anyone have any insight into if once digit starts writing insurance at < 100% CR if it will start to invest its profits in equities (both public and private) and slowly morph into a conglomerate with a similar business model to brk/ffh/mkl over time? 
 

would seem like a logical next step given BRK/FFH success. 

 

Separately, Prem mentioned that FFH manages float of majority owned insurance subsidiaries. I don’t think this applies to Digit but don’t know for sure. Does anyone know?
 

 

[dartmonkey]

if once digit starts writing insurance at < 100% CR if it will start to invest its profits in equities 

 

What about Odyssey or Brit or Allied? Should they also start to invest their profits in equities (both public and private) and slowly morph into conglomerates? Seems like a waste to replicate the Fairfax structure at the subsidiary level.

[nwoodman]

49 minutes ago, dartmonkey said:

if once digit starts writing insurance at < 100% CR if it will start to invest its profits in equities 

 

What about Odyssey or Brit or Allied? Should they also start to invest their profits in equities (both public and private) and slowly morph into conglomerates? Seems like a waste to replicate the Fairfax structure at the subsidiary level.

I think you will find the equities are  held at the sub level. This is also the case with Berkshire.

 

It will be the same for Digit.  Take Eurobank for example (from Perlexity):

 

Several subsidiaries of Fairfax Financial Holdings Limited own shares in Eurobank Ergasias S.A., a major Greek bank. According to the search results:

Zenith Insurance, Odyssey Reinsurance Company, TIG Insurance Company, United States Fire Insurance Company, First Capital Insurance Limited, TIG Insurance (Barbados) Limited, Advent Capital (Holdings) Ltd., Falcon Insurance Company (Hong Kong) Limited, Brit Insurance (Gibraltar) PCC Limited, Advent Capital (No. 3) Ltd., Newline Insurance Company Limited, Newline Corporate Name Limited, and Fairfax Financial Holdings Master Trust Fund have all acquired shares in Eurobank over the years.

 

For example, in December 2017, Zenith Insurance acquired 2,335,000 shares, Odyssey Reinsurance Company acquired 5,837,500 shares, TIG Insurance Company acquired 1,167,500 shares, and United States Fire Insurance Company acquired 2,335,000 shares in Eurobank.

A slightly more interesting question is where are the investment ideas going to originate?  Ultimately HWIC would sign off I would think.

Edited May 13, 2024 by nwoodman

[Matthew Lembo]

Fair points, and yes I agree the insurance subs are where much of the investments are held. However those subs are controlled so that FFH fully controls distributions and investments. 

 

Perhaps i am thinking about it incorrectly but was thinking that since Digit is going public and prolly wont be taken private anytime soon (at least that’s not the plan) it wont be fully controlled the same way Odyssey, Brit etc.. are so therefore FFH will not be able to spread its investments in Eurobank like equity securities across Digit’s capital. Would have thought Digit equity investments if any would be controlled by Digit which may have different desires than FFH. It might work for large market cap public investments (eg Micron) but it wont work for Atlas for example, b/c there is no public market for Atlas’ shares.  Plus would think Digit would want the majority of its equities portfolio to generate their earnings in Indian Rupees. 

 

Maybe i am over complicating it 

 

 

[nwoodman]

7 minutes ago, Maxwave28 said:

Fair points, and yes I agree the insurance subs are where much of the investments are held. However those subs are controlled so that FFH fully controls distributions and investments. 

 

Maybe i am over complicating it 

 

 

All good, I think you touched on the key point and that is control.  After all  Odyssey isn’t wholly owned either

[smed]

On 5/9/2024 at 10:17 AM, 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

It's official, Go Digit is now visible at NSE by choosing "Upcoming IPOs" at the following link:

https://www.nseindia.com/market-data/all-upcoming-issues-ipo

 

Ticker/symbol: GODIGIT