HDFC and Axis Banks today are 2 of India’s largest private lenders. They signed definitive agreements on the 21st April to pick up a 9.94 per cent equity stake each in the life insurance business of Go Digit, as shown by the regulatory filings. Go Digit is the IPO-bound insurtech unicorn.
HDFC had already proposed the investment in August 2022. Axis then made a similar proposal in September 2022. This is per their regulatory filings that are with the Bombay Stock Exchange.
HDFC and Axis Banks said on Saturday that they had signed agreements to buy up to 9.94 per cent stake each in Go Digit-Life Insurance Limited for a total cash consideration of rupees 10.93 crores each.
‘Go Digit Life’ is a recent venture of Go Digit General Insurance. With this, it looks to get into the market of life insurance. The new firm was started in December, the year 2021. Additionally, it was converted to a public limited company on 10th May 2022.
However, Go Digit-Life is yet to get a license from India’s Insurance Regulatory and Development Authority to carry out the life insurance business.
Further, Yourstory reported that, in separate exchange filings, the banks had informed about the financial investment in the Go Digit-Life. The filing says that Axis Bank executed definitive agreements. This was on 21st April 2023. It was to invest up to rupees 69.90 crores in Go Digit-Life in 2 tranches. This is subject to the terms and conditions in the definitive agreements.
The bank will pay rupees 10.93 crores as a part of the 1st tranche of the initial subscription. Additionally, it may elect to invest rupees 58.97 crores in the 2nd tranche post-completion of the initial subscription, the filing read.
Sources told Reuters that the deal with Go Digit could provide Axis Bank with an improved understanding of the online insurance industry. This may also allow Axis Bank to better outreach to insurance customers with the bank’s banking offerings.
The company, at present, offers some insurance products. It is in partnership with Max Financial.
HDFC Bank sets out similar conditions and structures. Moreover, the HDFC bank might complete the acquisition three to six months after the execution date.
Post the 1st tranche, the bank shall hold 9.94 % of the equity share capital of Go Digit. This will be by acquiring fully paid-up equity shares of the face value of 10 rupees each.
Last years proposals
On August 25, 2022, Economic Times reported that HDFC Bank was to pick a 10 per cent stake in Go Digit-Life Insurance. HDFC Bank had announced that it was to invest between rupees 49.9 crores to rupees 69.9 crores.
Inc42 had reported on 28th September 2022 that Axis Bank was to acquire up to 9.94 per cent Stake In Go Digit-Life Insurance.
Go Digit, is a general insurance online company. It offers insurance products that cover bikes, cars, homes, travel, and mobile. The insurtech startup Go Digit was founded in 2016 by Kamesh Goyal. The company offers insurance policies through different verticals. For example, auto, travel, health, and commercial properties like stores and holiday homes.
Also Read: DGGI sends tax evasion notice to HDFC. Policybazaar & Go Digit
