Axis Bank on Tuesday said it has signed an indicative and non-binding term sheet with Go Digit Life Insurance, to invest an amount between Rs 49.90 crore and Rs 69.90 crore in the company. The investment is proposed to be made in two tranches, by subscribing to equity shares of the online insurer, for an equity stake of up to 9.94%, the bank said in a regulatory filing to the exchanges.
Last month, another private sector lender, HDFC Bank, announced its intention to buy a stake of 9.94% in Go Digit. The stake purchases reflect the potential of the insurance sector in the country, where the penetration is very low.
The planned initial public offering (IPO) of Go Digit General Insurance, Go Digit’s general insurance business, has been put on hold this month.
The company is backed by Canadian billionaire Prem Watsa’s Fairfax Group. The Securities and Exchange Board of India (Sebi) said in a public disclosure on its website on Monday that the “issuance of observations (has been) kept in abeyance” with regard to the IPO of Go Digit. The regulator did not ascribe any reasons for the issuance being put on hold.