Participation by retail investors, who will get a significant chunk of shares in the much-awaited initial public offering of Life Insurance Corporation of India, is expected to be more than robust given the increase in new demat accounts.

B Gopkumar, Managing Director and CEO, Axis Securities, said there is a fair degree of interest in the LIC IPO from retail investors.

“We opened around 45,000 accounts for the IPO alone last month. Of these, 40 per cent of customers are new to the market,” he said.

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Mega LIC IPO to hit the market with a price band of ₹902-949
Discount for retail and employees pegged at ₹45 per share; policyholders to get discount of ₹60 per share

Varun Sridhar, CEO - Paytm Money, also said that with the LIC IPO coming up, the company believes that May will be a record month for demat account openings in recent times.

“It is a milestone event for Indian capital markets and is expected to bring millions of new investors…Given the trust that LIC has built with the common man over the decades, a lot of these investors are expected to come from tier-2 and -3 towns,” Sridhar said.

Price band

LIC has set its price band for the IPO at ₹902-949. A discount of ₹ 45 per equity share will be offered to retail and eligible employee category and ₹ 60 to policyholder category.

About 22.13 crore shares will be sold as part of the IPO, of which 0.025 per cent is reserved for employees and 0.35 per cent for policyholders. Beyond this, 35 per cent of the shares are reserved for retail investors.

Gaurav Dua, Head - Capital Market Strategy, Sharekhan by BNP Paribas, said that mega IPOs tend to boost retail participation and bring in many new investors into equity markets.

“With more than 27 crore LIC policy holders offered equity shares at 10 per cent discount to offer price, the LIC IPO could have quite a meaningful impact in terms of deepening of the equity culture in India,” he said, adding that the government has also taken the right decision to reduce the offer size to ₹21,000 crore and has priced the offering at valuations that are lower than expected earlier.

DIPAM Secretary Tuhin Kanta Pandey also expressed confidence of significant participation from retail investors.

The UPI IPO facility too has seen a rise in mandate creation in March after a dip in February. Over 4.3 lakh mandates were created in March, compared to about 99,400 mandates created in February. Atleast some of it would be due to investor interest in upcoming IPOs such as that of LIC.