The $440 million IPO of insurer Digit is “abeyanced” by the Indian market regulator

It is disappointing that the Indian capital market regulator has put Digit’s IPO application into “abeyance.” Digit is an online insurer hoping to go public.

The Indian market regulator, the Securities and Exchange Board of India (SEBI), updated the status of Fairfax-backed Digit to reflect the suspension of the issuance of observations regarding the startup’s filing.

The Indian startup, which is valued at $3.5 billion, filed a draught red herring prospectus to go public last month. Its investors include Sequoia Capital India, TVS Capital, A91 Partners, cricketer Virat Kohli, and actress Anushka Sharma.

The five-year-old startup expects to raise around $440 million in the IPO.

SEBI did not specify why it had put Digit’s IPO application in “abeyance,” but according to its guidelines, this occurs when “there is a probable cause for investigation, examination, or enquiry against the entities.”

When the board is unable to conclude an investigation because of the conduct of the entities, and when the regulator is unable to conclude an investigation or enquiry because of “reasons beyond its control or due to the conduct of the parties other than the entities,” are the other two reasons.

Digit is a part of a group of companies in India that offers auto, health, and travel insurance in an effort to increase the number of Indians who have insurance. According to a regulatory filing made at the end of last month, Digit, founded by Kamesh Goyal, a former KPMG executive with more than three decades of experience in the insurance industry, has simplified the process of purchasing insurance by enabling users to self-inspect, submit claims, and process service requests from their smartphones.

For the fiscal year ending in March, the startup reported total income of about $572 million and $37.29 million in losses. The company distributes its insurance through 32,600 partners, including nearly 31,000 point-of-sale agents and brokers.

The move by SEBI comes as a number of local startups, such as budget hotel chain Oyo and financial services platform MobiKwik, have put off their IPO plans while they keep a close eye on the condition of the global market, which has reversed much of the gains made during the 13-year bull run. Oyo, backed by SoftBank, announced on Monday that it had submitted updated paperwork for an initial public offering.

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