NSE IPO gets SEBI nod, may eye listing by September end

The Securities and Exchange Board of India (SEBI) issued an observation letter with the green light to NSE on Friday. With the path now clear following almost a decade of regulatory roadblocks, the issue could end up as the country’s biggest-ever IPO, surpassing Hyundai Motor India’s Rs 27,870 crore issue in 2024.

The unlisted market indicates a valuation of around Rs 5 lakh crore for the exchange.

The valuation and the amount raised now depend on the price band of the issue.

Rival BSE had raised Rs 1,243.43 crore through its public issue back in 2017. The stock has since gained nearly 29 times from its listing price, becoming among the most lucrative stocks in the market.

NSE dominates India’s equity ⁠derivatives market and is the world’s most active derivatives exchange by contracts traded. It also leads BSE in terms of revenues, market share, and liquidity.

It will also be interesting to see if the regulator allows NSE’s shares to trade on its own exchange through the “permitted-to-trade” route.

What is the IPO structure

The issue will entirely be an offer for sale (OFS) of 14.89 crore shares, representing around 6% of the exchange’s stake.

Funds raised via OFS are pocketed by selling shareholders and are not utilised in a company’s business.

SBI will offload up to 2.48 crore shares in the OFS.

MS Strategic (Mauritius) will sell up to 1.6 crore shares. Other major listed entities offloading some of their stakes include Bank of Baroda, General Insurance Company of India, and the New India Assurance Company. Shares of many of these companies have skyrocketed in the run-up to the issue.

For example, shares of New India Assurance shot up over 18% on Friday.

In fact, the stock has gained 34% over just a month. Having bought shares early on at an average cost of under a rupee, the IPO, which targets high valuations, is expected to unlock significant cash for the likes of SBI, Bank of Baroda, and the insurance companies.

The issue also comes at a time when the country’s IPO market is heating up again in recent months following improving market conditions and a slightly better geopolitical environment. Four issues are currently lined up for the next week, and it will be interesting to see if NSE’s IPO, alongside the plethora of issues lined up, impacts the volumes and liquidity in the secondary market.