Go Digit General Insurance Subscribed 9.60 times

About the IPO of Go Digit General Insurance Ltd

The IPO of Go Digit General Insurance Ltd will be open from May 15th, 2024 to May 17th, 2024; both days inclusive. The stock of Go Digit General Insurance Ltd has a face value of ₹10 per share and the price band for the book building IPO has been set in the range of ₹258 to ₹272 per share. The IPO of Go Digit General Insurance Ltd will be a combination of a fresh issue of shares and offer for sale (OFS) component. The fresh issue tends to bring in fresh funds into the company, but is also EPS and equity dilutive, while the OFS is just a transfer of ownership. The fresh issue portion of Go Digit General IPO comprises the issue of 4,13,60,294 shares (413.60 lakh shares approximately), which at the upper price band of ₹272 per share will translate into a fresh issue size of ₹1,125 crore. The offer for sale (OFS) portion of the IPO of Go Digit General Insurance Ltd comprises the sale / offer of 5,47,66,392 shares (547.66 lakh shares approximately), which at the upper price band of ₹272 per share will translate into an OFS size of ₹1,489.65 crore.

Out of the OFS size of 547.66 lakh shares, the promoter shareholder (Go Digit Infoworks Services Private Ltd) will be selling bulk of 547.56 shares. The balance 10,778 shares will be sold by 3 investor shareholders in the company. Thus, the total IPO of Go Digit General Insurance Ltd will comprise of a fresh issue and an OFS of 9,61,26,686 shares (961.27 lakh shares approximately) which at the upper end of the price band of ₹272 per share aggregates to total issue size of ₹2,614.65 crore. The IPO of Go Digit General Insurance Ltd will be listed on the NSE and the BSE on the IPO mainboard.

The fresh funds will be used for funding its digital and omnichannel growth in future and to spruce up its capital base. The promoters of Go Digital General Insurance Ltd are Kamlesh Goyal, Go-Digit Infoworks Services Private Ltd, Oben Ventures LLP, and FAL Corporation. Virat Kohli and Anushka Sharma have also invested in the company. The IPO will be lead managed by ICICI Securities, Morgan Stanley India, Axis Capital, HDFC Bank, IIFL Securities, and Nuvama Wealth Management; while Link Intime India Private Ltd will be IPO registrar.

How subscriptions evolved in the IPO period

While the QIB portion and the HNI / NII portion picked up traction on the last day, the overall journey was relatively tepid for the retail investors. In fact, it was not just the QIB portion that got fully subscribed only on the last day of the IPO; but even the HNI / NII portion got fully subscribed only on the last day of the IPO. The retail portion got fully subscribed on Day-1 of the IPO, while the overall IPO saw the subscription book filling up only on the last and final day of the IPO. That was the day that most of the traction of institutions and HNIs was visible in the IPO, which closed on 17th May 2024. The IPO was kept open for a total period of 3 consecutive trading days. While the retail portion did start off steady, the eventual traction slowed in the subsequent days, which is the general norm for retail. In terms of subscription ratio, the retail portion subscription trailed behind the QIB and the HNI / NII portion respectively. Here is the day-wise progress in IPO subscription of the total available quota. The oversubscription in the table below represents the oversubscription; net of the anchor allocation of shares, which was completed one working day prior to the opening of the IPO.

Data Source: BSE

As can be seen from the above table, the overall IPO got 9.60 times subscribed at the close of the third and final day of the IPO on 17th May 2024. Here is a quick look at how the various categories saw traction on the last day of the IPO.

• The QIB portion got 0.00 times subscribed at the end of the first day of the IPO. However, on the last day of the IPO, the subscription moved from 0.24X to 12.56X.

• The HNI / NII portion got 0.35 times subscribed at the end of the first day of the IPO. However, on the last day of the IPO, the subscription moved from 0.73X to 7.24X.

• Retail portion got 1.50 times subscribed at the end of the first day of the IPO. However, on the third and final day of the IPO, the subscription moved from 2.57X to 4.27X.

• The overall IPO got 0.37 times subscribed at the end of the first day of the IPO. However, on third and final day of the IPO, overall subscription moved from 0.80X to 9.60X.

Rapid update on the overall IPO response

The IPO saw fairly modest response on the Day-1 and Day-2, with most of the action visible only on Day-3 of the IPO, as is normally the case. However, the IPO did close with relatively modest subscription numbers at the close of Day-3. In fact, the IPO of Go Digit General Insurance Ltd got fully subscribed on the third and final day of the IPO only, thanks to the traction in the QIB and HNI / NII portions. As per the combined bid details put out by the BSE at the close of Day-3, Go Digit General Insurance Ltd was subscribed 9.60X overall, with best demand coming from the QIB Segment, followed by the HNI / NII segment and the Retail segment in that order.

In fact, the institutional QIB segment and the HNI / NII segments saw some very good traction on the last day. The HNI portion did do well and a lot of the surge of funding applications and corporate applications did come in on the last day of the IPO. Retail portion was relatively less aggressive on the last day, although it was fully subscribed on Day-1 of the IPO, but subsequent traction was a tad lower in comparison. Firstly, let us look at the details of overall allocation of shares to various categories of investors. It may be noted that in the final allocation of shares, minor variations are normal as part of intra-segment adjustments. These, however, do not impact the total number of shares materially.

Data Source: Company RHP

Having understood the allocation of shares across various categories, Let us look at how the subscription data played out for the IPO at an overall level and at a more granular level.

As of close of 17th May 2024, out of the 528.70 lakh shares on offer in the IPO (excluding anchor portion), Go Digit General Insurance Ltd saw bids for 5,076.21 lakh shares. This implies an overall subscription of 9.60X at a macro level. The granular break-up of subscriptions was in favour of the QIB segment followed by the HNI / NII investors and the Retail investors in that order. QIB bids and NII bids typically gather most of the momentum on the last day, and that was the case in this issue also in the case of QIB bids. Both the QIB and the NII bids picked momentum on the last day and added to its heft of the previous days. Here are the details of the category-wise subscription. The overall subscription excludes anchor portion.

Data Source: BSE

Subscription status of QIB Portion

On 14th May 2024, Go Digit General Insurance Ltd completed the bidding for its anchor allocation. There was a robust response as the anchor investors participated through the process of book building. A total of 4,32,57,009 shares were allotted to the anchor investors. The allocation was done at the upper IPO price band of ₹272 per share (including premium of ₹262 per share) which resulted in an overall allocation of ₹1,176.59 crore. The anchors absorbed 45.00% of the total issue size of ₹2,614.65 crore. It may be noted that half the anchor portion is locked for 1 month from the date of allotment i.e. up to June 20th, 2024. The other 50% is locked for 3 months from the date of allotment i.e., up to August 19th 2024.

The QIB portion (net of anchor allocation as explained above) had a quota of 288.38 lakh shares of which it has got bids for 3,622.70 lakh shares at the close of Day-3, implying a subscription ratio of 12.56X for QIBs at the close of Day-3. QIB bids typically get bunched on the last day and while the heavy demand for the anchor placement had given an indication of the institutional appetite for the Go Digit General Insurance Ltd subscription overall, the actual demand did turn to be quite robust for the IPO.

Subscription status of HNI / NII Portion

The HNI portion got subscribed 7.24X (getting applications for 1,043.41 lakh shares against the quota of 144.19 lakh shares). That is a relatively strong response at the close of Day-3 largely because this segment normally sees the maximum response bunched on the last day. Bulk of the funded applications and corporate applications, come in on the last day of the IPO, and that was visible as the overall HNI / NII portion added to its heft on the last day of the IPO. Apart from the QIB portion, even HNIs saw good traction on the last day.

Now the NII/HNI portion is reported in two parts viz. bids below ₹10 lakhs (S-HNI) and bids above ₹10 lakhs (B-HNI). The bids above the ₹10 lakh category (B-HNIs) typically represents most of the major funding customers. If you break up the HNI portion, the above ₹10 lakh bid category got subscribed 8.28X while the below ₹10 lakh bid category (S-HNIs) got subscribed 5.15X. This is just in the form of additional information and is already part of the overall HNI bids explained in the previous para.

Subscription status of Retail Individuals

The retail portion was subscribed a modest 4.27X at the close of Day-3, showing relatively modest to strong appetite. It must be noted that retail allocation is 10% in this IPO. For retail investors; out of the 96.13 lakh shares on offer, valid bids were received for 410.11 lakh shares, which included bids for 361.25 lakh shares at the cut-off price. The IPO is priced in the band of (₹258 to ₹272 per share) and has closed for subscription as of the close of Friday, 17th May 2024. The final pricing decision in the band is awaited, though upper end looks likely.

Next Steps in the Go Digit General Insurance Ltd

The issue opened for subscription on 15th May 2024 and closed for subscription on 17th May 2024 (both days inclusive). The basis of allotment will be finalized on 21st May 2024 and the refunds will be initiated on 22nd May 2024. In addition, the demat credits are expected to also happen on 22nd May 2024 and the stock will list on 23rd May 2024 on the NSE and the BSE. Go Digit General Insurance Ltd will test the appetite for private sector insurance originating stocks in India. The credits to the demat account to the extent of shares allotted will happen by the close of 22nd May 2024 under ISIN (INE03JT01014).