LIC IPO will see record demat account openings in India: Paytm Money CEO

Big push for new demat accounts likely to come from smaller cities and towns, as many investors will open them only to apply for the IPO

The Life Insurance Corporation (LIC) IPO will result in one of the best months for Indian capital markets despite a broader sell off in the equities over the past one month, according to Paytm Money CEO Varun Sridhar.

"With the LIC IPO coming up, we believe 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,” he said.

All eyes are on the life insurance behemoth's IPO which is set to open on May 2 for anchor investors and on May 4 for retail subscription. The IPO will include a 3.5 per cent stake sale in LIC to raise Rs 21,000 crore with a price band of Rs 902 to Rs 949.

“Given that LIC policyholders will receive a Rs 60 discount, while employees and retail investors will get a Rs 45 discount, we may see many new investors from smaller cities and towns also opening their demat accounts only to apply for the LIC IPO,” added Sridhar.

The number of active dematerialised (demat) accounts in the country jumped 63 per cent in the past 12 months to 89.7 million in financial year 2021-22 (FY22), shows data provided by depositories.

The growth was underpinned by factors such as an increase in smartphone usage, easier digital onboarding of customers, and attractive returns delivered by the equity markets. As of March 31, the Central Depository Services (CDSL) managed 63 million accounts with assets under custody (AUC) of Rs 37.2 trillion. Meanwhile, the National Securities Depository (NSDL) handled 26.7 million accounts with AUC of Rs 302 trillion.

In the post-pandemic world, the number of demat accounts have jumped 2.2 times, while combined AUC too has doubled.

Paytm Money said that new retail investors looking to understand further about LIC IPO and its impact on the capital markets, can also access detailed IPO reports, application statistics, and a host of live events on Paytm Money app to help decide whether they want to participate in the IPO and how much to invest.