The Indian capital market regulator has moved Digit’s IPO application to “abeyance,” it said in what is a disappointing development for the online insurer’s plan to go public.
The Securities and Exchange Board of India (SEBI), the Indian market regulator, updated the status of Fairfax-backed Digit to note that it had moved the process of issuance of observations for the startup’s filing into abeyance.
The Indian startup, valued at $3.5 billion and which also counts Sequoia Capital India, TVS Capital, A91 Partners and cricketer Virat Kohli and actress Anushka Sharma among its backers, filed the draft red herring prospectus to go public last month.
TechCrunch reported that the five-year-old startup is looking to raise about $440 million in the initial public offering.
SEBI did not offer an explanation for why it had put Digit’s IPO application to “abeyance,” but according to its guidelines, one of the reasons it takes this step is when “there is a probable cause for investigation, examination or enquiry against the entities.”
The other two reasons are: When the regulator is unable to conclude an investigation or enquiry due to “the reasons beyond its control or due to the conduct of the parties other than the entities,” and when the board is unable to conclude the investigation due to the conduct of the entities.
Digit sells auto, health and travel insurance and is part of a group of firms that is attempting to expand the number of individuals in India that buy insurance coverage. Founded by Kamesh Goyal, an ex-KPMG executive with more than three decades of experience in the insurance industry, Digit has simplified the process of buying insurance, allowing users the ability to self-inspect, claim submissions and process service requests from their smartphones, it said in the filing last month.
The startup, which distributes its insurance through 32,600 partners, including nearly 31,000 point of sale agents and brokers, reported a total income of about $572 million and $37.29 million in losses for the fiscal year that ended in March.
SEBI’s move comes at a time when several local startups, including budget hotel chain Oyo and financial services platform MobiKwik, have delayed their IPO plans as they closely monitor the condition of the global market, which has reversed much of the gains from the 13-year bull run. SoftBank-backed Oyo has filed fresh documents to go public, it said Monday.
Digit didn’t immediately respond to a request for comment Monday.