NSE gets board approval to launch IPO
What's the story
Last month, the National Stock Exchange (NSE) of India received green light from the Securities and Exchange Board of India (SEBI) to go public. Now, the exchange's governing board has approved plans for an initial public offering (IPO) via an offer-for-sale by existing shareholders. This means that current investors will have a chance to sell their shares in the market, providing liquidity after years of waiting.
Listing history
NSE's IPO journey has been challenging
The journey to NSE's IPO has been a long one, spanning nearly a decade. The exchange first announced its plans to go public in 2016, but the process was stalled due to regulatory scrutiny over governance lapses. These included preferential access to trading systems and co-location facilities. However, in recent years, NSE has strengthened compliance and settled outstanding matters with SEBI, paving the way for renewed listing plans.
Market impact
OFS structure means no fresh capital raised
The OFS structure means NSE won't raise fresh capital through this IPO. Instead, it will provide an exit route and liquidity to current investors who have been waiting for over a decade. Market participants expect NSE's public debut to be one of India's largest listings, given its dominant position in equity and derivatives trading.
Filing details
NSE likely to file DRHP by March-end
According to a CNBC-TV18 report, NSE is likely to file its draft red herring prospectus (DRHP) by the end of March or early April. The report also said that about 4.5% of NSE's equity is likely to be sold in the offering. At the current unlisted market price of some ₹2,000 per share, this could make it one of India's largest public offerings with a size of around ₹23,000 crore.
Shareholder dynamics
The way forward for NSE's IPO
NSE's Managing Director and CEO Ashish Kumar Chauhan has expressed a preference for the OFS route. This would allow existing shareholders to dilute their holdings without raising fresh capital. However, given the exchange's expanded shareholder base of around 1.91 lakh shareholders, it will have to engage with them and seek consent for participation in this process which could be time-consuming due to dispersed ownership.