NSE to file draft papers for its IPO next week
What's the story
The National Stock Exchange (NSE), India's largest stock exchange, is gearing up for its long-awaited initial public offering (IPO). According to PTI, the NSE is likely to file its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) next week. This comes after NSE's board approved the proposed IPO on February 6, following SEBI's no-objection certificate.
Composition
IPO to be complete OFS
The upcoming IPO will be a complete offer for sale (OFS), with no fresh issue component. The filing of the DRHP is expected to be a major milestone for the NSE, which has been waiting to list for nearly a decade due to regulatory issues. These include the co-location controversy that had put its listing plans on hold.
Investor profile
Shareholding pattern of NSE
The NSE boasts a diverse shareholder base, including domestic financial institutions, insurance companies, foreign investors, and individual shareholders. Life Insurance Corporation of India (LIC) is the largest stakeholder in NSE with a 10.72% stake. SBI and its subsidiary SBI Capital Markets hold around 7.5% stake in the exchange. Foreign investors such as Aranda Investments (a Temasek subsidiary) and Canada Pension Plan Investment Board (CPPIB) also have significant stakes in NSE.
Market impact
Proposed IPO to be 1 of the largest public issues
The proposed IPO is expected to be one of the largest public issues in India's capital markets. The NSE, which has some 1.8 lakh shareholders, is valued at over ₹5 lakh crore in the unlisted market, according to market participants. In 2016, NSE had first filed draft offer documents to raise around ₹10,000 crore through an OFS by existing shareholders. However, SEBI withheld approval due to governance lapses and the co-location case.
Compliance steps
NSE takes steps to address governance concerns
Since 2016, the NSE has made several representations to SEBI seeking clearance and has taken several governance and compliance measures. As part of its IPO preparations, the exchange has appointed 20 merchant bankers, legal advisers, and other intermediaries to manage the proposed public issue. In January this year, SEBI Chairman Tuhin Kanta Pandey said that the regulator had granted "in-principle" approval to NSE's settlement application in an unfair market access case.