As per the Draft Red Herring Prospectus filed by the Life Insurance Corporation of India (LIC), in the forthcoming initial public offering (IPO) of the insurer, about 316 million shares are reserved for LIC policyholders alone. If we add the insurer’s employees and retail investors who are interested in participating in the IPO, this number becomes even bigger. To apply for shares, one would need a demat account.
As per NSDL (National Securities Depository Limited) data, there are about 25.48 million active demat accounts. Central Depository Services (India) (CDSL) has about 58.49 million accounts. In anticipation of the mega LIC IPO, stock brokers are taking steps to woo investors.
LIC is a household name and according to Brand Finance, a London-based consultancy company, the insurer’s brand value is estimated at $8.1 billion. So, when a company this size hits the capital markets, it is bound to create a buzz and stockbrokers are hoping to cash in on that buzz.
There may be many first-time investors, including LIC policyholders, who may want to open a demat account so that they can also apply for shares in the IPO. Tapping this opportunity, several brokers have either opened dedicated portals or have launched marketing campaigns centred around the LIC IPO.
"We are running free Demat schemes for our partners that are keen on motivating LIC IPO applicants. In addition, we have encouraged LIC agents to partner with us as introducers to refer clients to PL. Our eIPO site will facilitate LIC policyholders to subscribe to this IPO via the reserved quota as well. To gear up to the demand, we are also keeping our account opening staff in a ready mode so the spike in traffic can be managed well in time for the IPO," said Sandip Raichura, CEO at Prabhudas Lilladher, a stockbroking and financial services firm.
Many more such techniques are expected to be deployed as the LIC IPO dates may be declared soon.