Go Digit Insurance, based in India, has re-filed draft documents for a $440 million initial public offering (IPO) after allaying concerns raised by the market regulator regarding the company’s employee stock plans, which sparked months of speculation. The deal was pulled.
According to the draft prospectus, which was filed on March 30 and remains unchanged from the company’s previous filing, the IPO will include a new offering for the sale of 109.4 million shares and a new issue of shares worth 12.5 billion rupees ($152.1 million).
In August of last year, Digit, which operates in the general insurance industry and has the backing of Canadian billionaire Prem Vats’ Fairfax Group and TVS Capital Funds, made its initial application for an initial public offering.
However, due to issues with share issuance compliance, the Securities and Exchange Board of India (SEBI) put its listing plans on hold in September. Later that month, a review was resumed by SEBI.
In a private letter in January of this year, SEBI raised a number of compliance issues pertaining to employee stock plans, which caused the IPO to experience yet another setback.
Digit told Reuters in January that it was assessing alterations to its representative stock appreciation freedoms plan in the wake of accepting Sebi’s letter.
These rights allow an employee to receive a bonus equal to the increase in the company’s share price over a certain period of time, which is only available to companies that go public under Indian regulations.
According to Sebi’s letter, Digit was found “not eligible to make an initial public offer” as a result.
Until the company converts its employee stock rights into stock option plans and renews paperwork with the regulator, the IPO will be put on hold, according to Reuters.
According to Go Digit’s most recent filing, the company approved the stock option plan on March 27 and converted its employee stock rights into stock options.
General insurance services are offered by the $3.5 billion company that was previously owned by Sequoia Capital.
The IPO proceeds will be used to maintain the company’s solvency ratio, the plan states.
($1 equals 82.1750 Indian Rupees) (according to a Bengaluru report by Nandan Mandayam; Sonia Cheema edited)