India's Axis Bank is in talks to acquire a stake in Go Digit Life InsuranceDigit 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 in the start-up's upcoming life insurance business, effectively valuing the business at $90 million, according to the two sources, who declined to be named as the talks were private.
A Digit spokeswoman said the company had not yet received a license 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 is backed by Canadian billionaire Prem Watsa and Sequoia Capital. Axis plans underscore growing interest in India's lucrative insurance business from private lenders, one of the sources said, could help Axis fulfill its insurance ambitions.
India's life insurance market, the world's tenth biggest, remains largely untapped. Life insurance penetration - measured by the country's life insurance premium as a percentage of 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.
Axis is currently providing some insurance products in partnership with Max Financial, but the Digit deal may give Axis a better understanding of the online insurance industry and allow it to outreach to customers with its own banking offerings, the source said.
Insurance companies in India are luring customers with online offerings that promise instant policy issuance and easier claims. In India, the sale of insurance through traditional agents is popular, particularly in small towns.
Go Digit General Insurance recently filed papers to raise $440 million via an initial public offering, eyeing a valuation of $5 billion. Kamesh Goyal is an industry veteran who previously ran the India joint venture of Germany's Allianz.