The Securities and Exchange Board of India (SEBI) on Friday gave its final approval to the National Stock Exchange’s (NSE) long-awaited public offering, clearing the last hurdle for the exchange to go public nearly a decade after it began pursuing a listing.
Sources said NSE may file an updated Red Herring Prospectus (RHP) and announce the price band next week, with the initial public offering (IPO) likely to open for subscription the following week and list before September 25.
“There were no sellers at the NSE counter following the news of the IPO approval,” said Vijay Gada, Founder of KuberGrow Financials. In the unlisted private market, the NSE stock witnessed strong demand from retail investors. The stock surged from an intraday low of ₹1,965 to ₹2,080, while trading volumes rose more than 25 per cent on Friday.
“Over the past two days, trading volumes have increased more than tenfold. Most retail investors are buyers in the unlisted private market. Institutional investors, who had been sellers, remained on the sidelines today. We expect greater retail participation ahead of NSE’s Red Herring Prospectus filing with SEBI,” Gada added.
On Thursday, NSE’s share price remained range-bound between ₹1,945 and ₹2,045 per share.
The country’s largest stock exchange is currently valued at around ₹5 lakh crore in the unlisted market and is expected to be among the largest IPOs, with an estimated issue size of around ₹30,000 crore. The final valuation, however, will depend on the price band set by the exchange for the IPO.
The issue comprises an offer for sale (OFS) of up to 14.89 crore shares, representing about 6 per cent of NSE’s paid-up equity capital. The exchange, however, will not receive any proceeds from the offer.
The State Bank of India group is the largest selling shareholder and will offer up to 2.475 crore shares, followed by MS Strategic (Mauritius), which will sell up to 1.60 crore shares, and the Canada Pension Plan Investment Board (CPPIB), which will offer up to 1.19 crore shares. Other sellers include Aranda Investments (Mauritius), Bank of Baroda, Stock Holding Corporation of India, General Insurance Corporation of India, National Insurance Company and United India Insurance Company.
The final approval comes a day after the Supreme Court disposed of SEBI’s appeals against the NSE in the long-running co-location and dark-fibre cases. The appeals followed Securities Appellate Tribunal orders that had set aside SEBI’s disgorgement directions against the exchange. NSE had agreed to pay Rs 1,491.21 crore to settle the two matters.
The co-location case arose from allegations that certain brokers received preferential access to NSE’s trading systems and tick-by-tick data, giving them an unfair speed advantage in 2015. In the dark-fibre case, SEBI alleged that two brokers gained an advantage through point-to-point connectivity between their NSE and BSE co-location facilities.
The settlement and the subsequent disposal of the Supreme Court proceedings removed a key legal overhang that had weighed on NSE’s listing plans for nearly a decade.
NSE’s listing plans gained momentum earlier this year after it received a no-objection certificate from the regulator. Following this, the exchange filed its draft red herring prospectus with SEBI in June. The exchange has appointed a record 20 investment bankers for the issue.
During the quarter ended June, the stock exchange reported a net profit of ₹3,120 crore, up from ₹2,923 crore in the corresponding period last year. Revenue from operations increased to ₹4,560 crore in the first quarter from ₹4,032 crore a year earlier, although it declined 8 per cent on a sequential basis.