LIC IPO: Life Insurance Corporation of India, India’s largest insurance company, is expected to file its IPO prospectus soon. While LIC is working on key points related to the mega IPO (which is estimated to be worth over Rs 1 lakh crore), brokers are gearing up to cash in on the huge interest from LIC policyholders.
Competition started with quota of 10% policyholders
The government’s decision to create a 10% policyholder quota in IPOs is unique and the prospect of a discount on the IPO price has encouraged many policyholders to open their demat accounts. To invest in an IPO, it is necessary to have a demat account.
The brokerage feels that the LIC IPO can help them in garnering a lot of new customers, who would be new capital market investors opening demat accounts to invest in the IPO.
Estimated to open 10-30 lakh new demat accounts
“We anticipate opening 10-30 lakh new demat accounts to participate in LIC’s IPO,” says Prakash Gagdani, chief executive officer of discount broker 5Paisa.com, a subsidiary of IIFL.
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However, the final figure may be higher than expected. Gagdani conceded that if policyholders get a discount, many of them would like to apply for an IPO.
LAC’s reach vs. Brokers’ reach
LIC has more than 25 crore policyholders, while the number of demat accounts is 8 crore. Many of these stock markets will be new investors, so brokers want to simplify the investment process for them.
“We are simplifying our user interface to make it easier for investors to open their accounts,” says Ajay Menon, MD and CEO (broking-distribution), Motilal Oswal Financial Services (MoFSL).
Menon said, “LIC’s reach is much more than the broking industry. So, this will help us in getting new customers. We are in touch with policyholders as well as LIC agents.”
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don’t wanna miss any chance
LIC is a household name. The insurance company has a market share of 61.4 per cent in new business premiums in the life insurance space as of December 31, 2021 (data from IRDA). The market share of LIC is 6-7 times as compared to SBI Life, the second largest insurer.
LIC agents say that policyholders do not want to miss out on this investment opportunity and want to ensure that they fulfill all the conditions.
Bharat Parekh, an LIC agent based in Mumbai says, “Daily, 200-300 PANs are being updated in our client database. We currently service more than 45,000 policies. In the last two months, our Maharashtra office is receiving an average of 30 calls and visits from people who want to participate in the IPO.”
LIC has asked policyholders to update their PAN and demat details.
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People buying policies for LIC IPO
Some people are taking new policy just because they want to be eligible for IPO. He said, “We primarily deal with high net worth individuals. Many of them are coming forward to buy LIC policies for their family members so that the entire family becomes eligible for preferential allotment.”
Kirit Joshi, 51, a Nagpur-based businessman, says, “Our entire family will invest in LIC’s IPO. In fact, my mother-in-law of 78 years will open a demat account to invest in the public offer. It is a highly trusted brand and being a policyholder of LIC over the years, we want to be a part of this IPO as well.”
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