India will see the highest new demat account openings ahead of LIC IPO, says Zerodha's Nithin Kamath

The upcoming LIC IPO will bring the greatest number of new investors to the stock markets, says stockbroking and trading platform Zerodha’s co-founder and CEO Nithin Kamath.

India awaits the details of the country’s largest ever initial public offering (IPO) by the Life Insurance Corporation of India (LIC).

“We have been looking forward to this for the past two years…and whichever month the IPO happens in, I think India will see the largest month in terms of new account openings for capital markets for sure,” Kamath said.

Kamath was speaking at Niti Aayog’s Fintech Open Month on a panel with Razorpay co-founder and CEO Harshil Mathur and PwC’s Partner and India lead for fintech, Vivek Belgavi.

The LIC IPO comes at a time when the stock markets have been choppy, but also following the immense interest seen from first time retail investors during IPOs over the past year.

“The flip side here is that markets have been in a spot over the last few weeks. IPOs are also about luck depending on whether it’s a good or a bad period. The retail appetite will be interesting to see because there is a fear creeping in about how the markets will hold up,” he added.

Zerodha has over eight million customers and has benefited from the huge interest shown by Indians in stock market investing post the pandemic.

The LIC IPO follows listings by fintech players seen in the past few months, namely PB Fintech and Paytm. Ahead of the IPO, LIC also tied up with Policybazaar to make its policies available on the online insurance marketplace.

This was a first of its kind move for LIC which has always been dependent on its network of 1.3 million agents to disseminate policies. According to Razorpay’s Mathur, this is a positive sign for fintech players and may signal more collaboration with fintechs in the future.

“It is a very different kind of an IPO, there is no one in the country who has not heard of LIC. LIC’s tie-up with Policybazaar shows that they are opening up to digitization and the fintech ecosystem in general. So if the IPO goes well they may do more (collaborations) in the insurtech space,” he said.

The insurtech space is made up of insurance broking platforms such as Policybazaar, Paytm, Coverfox and digital general insurance companies, including Acko and Digit. Platforms such as Policybazaar and Turtlemint also help consumers compare policies before choosing the right fit.

What is drawing users to these companies is their focus on simplifying processes after studying the challenges faced by customers while buying insurance.

PwC’s Belgavi too feels that a successful IPO of India’s largest life insurance player can have a positive impact on the insurtech space.

“Right now LIC is using them (Policybazaar) as a channel. But later as they start allowing insurtech players to co-create products, it can really change the face of insurtech,” Belgavi said.

He added that with over 1.3 million agents and 80 million customers, the number of people aware of the IPO is large and this may mean larger participation in the IPO.