India-based private sector lenders Axis Bank and HDFC Bank have signed definitive agreements to purchase up to 9.94% stake each in insurtech startup Go Digit Life Insurance.

Go Digit Life plans to conduct life insurance business in India, once it receives certificate of registration from Insurance Regulatory and Development Authority of India (IRDAI).

As part of the new deals, both lenders will pay a total cash consideration of INR699m ($8m) each.

The amount will be paid in two tranches, with around INR109.3m in the first tranche as an initial subscription.

Following the payment in the first tranche, Axis and HDFC will be able to gain 9.94% each in the equity share capital of Go Digit Life.

The banks may later choose to provide the remaining INR589m in the second tranche.

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By GlobalData

The latest agreements are based on two deals reached by Axis and HDFC last year.

In September last year, Axis announced its intention to invest in Go Digit Life, while HDFC revealed its plan to invest in the insurtech in August last year.

Announcing the latest deal, both banks said in sperate filings: “This transaction of acquisition of equity shares does not constitute a related party transaction.

“As on date, the Bank’s promoters do not have any interest in Go Digit Life.

“The Bank and its subsidiaries in the ordinary course of business may have business dealings with Go Digit Life at an arm’s length basis.”