The initial public offering (IPO) of Life Insurance Corporation of India, which saw strong support from retail investors, seems to have brought in a huge number of new investors into the equity markets.
According to analysts and experts, first-time investors and investors from tier-2 and 3 towns seem to lead the surge in interest in the IPO of LIC, which saw policyholders subscribe to 60 per cent of the issue size.
Investors from tier-2 and 3 cities
A report in The Business Line quotes Girirajan Murugan, CEO, FundsIndia, as saying that there was huge participation from investors from tier-2 and 3 cities in the IPO. “In the applications we received, retail investors from the beyond 30 cities are dominating in terms of participating in the IPO. It explains LIC’s significance in the life insurance segment and its reach,” he said, adding that overwhelming subscriptions have come in from retail investors, especially those who are participating in the capital markets for the first time.
Varun Sridhar, CEO, Paytm Money, said the company registered a surge in new account openings by 200 per cent during the LIC IPO with a majority of accounts opened by first-time investors under 30 years of age, the report adds.
The LIC IPO acted as a stimulus in driving retail participation in equity markets, said B Gopkumar, Managing Director and CEO, Axis Securities. “At Axis Securities, we received substantial applications for this IPO. Over 97 per cent of participation was from domestic investors, of which female investors constituted 26 per cent of the subscription,” the Hindu Business Line report quoted him.
Govt upbeat about retails investors
According to the brokerage, the top three contributing states were Maharashtra, followed by West Bengal, and Gujarat.
LIC is expected to be listed on the stock exchanges on May 17.
The Government and LIC were upbeat about participation of retail investors in the IPO. According to LIC Chairman MR Kumar, about 6.5 crore PANs had been linked to LIC policies.
There was also a Rs 45 per equity share discount for retail investors and Rs 60 per equity share discount for policyholders on the price band in the IPO, which closed on May 9.
The portion reserved for eligible policyholders was subscribed 6.12 times, while that for eligible employees was subscribed 4.4 times and the retail category was subscribed 1.99 times.