India's Axis Bank eyes 10% stake in Go Digit life insurance business-sources

Max Financial Services

30/08/2022 09:51

* Axis eyes insurance play with stake in Indian
startup-sources
    * HDFC Bank has disclosed similar stake buy plan for Go
Digit
    * Deal values Digit's life insurance business at $90 million

    By M. Sriram
    MUMBAI, Aug 30 (Reuters) - India's Axis Bank  AXBK.NS  is in
talks to acquire a stake in Go Digit Life Insurance, two sources
with direct knowledge of the matter told Reuters, as the
country's third biggest private lender seeks to tap a
fast-growing insurance market.
    Axis is planning to take a 10% stake for around $9 million
in the start-up's upcoming life insurance business, effectively
valuing the business at $90 million, said the two sources, who
declined to be named as the talks were private.
    The move comes after India's biggest private lender HDFC
Bank  HDBK.NS  said in a stock exchange disclosure last week
that it planned to buy a 9.94% stake in Go Digit Life for up to
700 million rupees ($9 million). 
    Start-up Digit, which already works in the general insurance
business, is foraying into the life insurance market with its
"Go Digit Life" venture. 
    A Digit spokesperson declined to comment, saying the company
had not yet received a licence for its life insurance business.
Axis did not respond to Reuters' request for comment.
    Go Digit General Insurance, Digit's general insurance
business, says it is valued at $4 billion and backed by Canadian
billionaire Prem Watsa and Sequoia Capital. It offers products
such as health, travel and automobiles coverage.
    Axis' plans underscore growing interest in India's lucrative
insurance business from private lenders, one of the sources
said, adding that the partnership with Digit could help Axis
fulfill its insurance ambitions.
    India's life insurance market, the world's tenth biggest,
remains largely untapped. Life insurance penetration - which is
measured by the country's life insurance premium as a percentage
of its gross domestic product - grew to 3.2% in the fiscal year
to 2021, up only slightly from 2.15% two decades ago, according
to data from India's insurance regulator.
    While Axis currently offers some insurance products in
partnership with Max Financial, the Digit deal may give Axis a
better understanding about the online insurance industry and
allow it to improve outreach to insurance customers with its own
banking offerings, the source said.
    Insurance companies in India are increasingly luring
customers with online offerings, promising instant policy
issuance and easier claims. The sale of insurance through
traditional agents remains popular in India, particularly in
small towns.
    Go Digit General Insurance recently filed papers to raise at
least $440 million via an initial public offering, eyeing a
valuation of $5 billion. Its founder Kamesh Goyal is an industry
veteran who previously headed the India joint venture of
Germany's Allianz.  urn:newsml:reuters.com:*:nL4N2ZS149 urn:newsml:reuters.com:*:nL2N2XH0DN 

 (Reporting by M. Sriram; Editing by Aditya Kalra and Ana
Nicolaci da Costa)
 ((Sriram.Mani@thomsonreuters.com;))