NSE IPO finally nears reality: DRHP filing expected today after nearly 10-year wait

The long-awaited initial public offering (IPO) of the National Stock Exchange (NSE) may move a step closer, with the country's largest stock exchange expected to file its Draft Red Herring Prospectus (DRHP) with market regulator SEBI on Wednesday, according to sources.

The proposed IPO is expected to be entirely an Offer for Sale (OFS), under which existing shareholders will sell part of their holdings. NSE is not expected to raise any fresh capital through the issue.

The filing would mark a major milestone in NSE's efforts to enter the public markets after nearly a decade of delays.

IPO May Raise Around Rs 23,000 Crore

According to market estimates, the proposed IPO could raise around Rs 23,000 crore through the OFS route. Since the issue is expected to be entirely an Offer for Sale, the proceeds from the share sale will go to the selling shareholders and not to the exchange.

Sources said the issue may involve the sale of around 4-5 per cent equity stake and could value NSE at over Rs 5 lakh crore, making it one of the largest public offerings in the country.

Market participants estimate that the value of shares offered by existing shareholders could be close to Rs 30,000 crore based on prevailing valuations. The dilution could be larger than the Rs 27,000-crore dilution seen in the IPO of Hyundai Motor India.

PSU Shareholders May Be Major Sellers

Public sector undertakings (PSUs), which collectively hold a 31.29 per cent stake in the NSE, are expected to be among the key participants in the proposed share sale.

Sources said PSU shareholders may sell shares worth nearly Rs 15,500 crore and could dilute around 10 per cent of their holdings through the IPO. A total of 14 PSU-linked institutions hold stakes in the exchange, making them one of the largest shareholder groups in the NSE.

LIC Largest PSU Shareholder

Life Insurance Corporation of India (LIC) is the largest PSU shareholder in the NSE with a 10.72 per cent stake. Among other major PSU investors, Stock Holding Corporation of India Ltd (SHCIL) owns 4.44 per cent, while SBI Capital Markets holds 4.33 per cent.

State Bank of India is the largest PSU bank shareholder with a 3.23 per cent stake. Bank of Baroda owns 0.89 per cent, Indian Bank holds 0.34 per cent, and Punjab National Bank has a 0.11 per cent stake in the exchange.

State Bank of India is expected to be the largest seller in the proposed NSE IPO, according to estimates. SBI may offload around 24.75 million shares. Bank of Baroda and Stock Holding Corporation of India may each sell around 11 million shares.

Insurance Companies Hold Significant Stakes

Insurance companies account for the largest share of PSU ownership in the NSE. Apart from LIC, General Insurance Corporation of India (GIC Re) holds a 1.64 per cent stake. The Oriental Insurance Company, National Insurance Company and The New India Assurance Company each own 1.42 per cent.

General Insurance Corporation of India (GIC Re) is expected to offload 10.65 million shares, while The New India Assurance Company may sell about 10.5 million shares, according to estimates.

United India Insurance holds a 0.78 per cent stake, while SBI Life Insurance owns 0.33 per cent. IDBI Trusteeship Services Ltd holds a 0.20 per cent stake in the exchange.

Regulatory Hurdles Delayed Listing

NSE's IPO plans have faced multiple delays over the years due to regulatory and legal hurdles. The biggest obstacle was the co-location case, in which certain brokers were alleged to have received preferential access to the exchange's trading infrastructure. The matter led to investigations by the Securities and Exchange Board of India (SEBI) and prolonged regulatory scrutiny.

The exchange also faced issues related to dark fibre connectivity, governance concerns and allegations of unfair market access. As a result, SEBI had withheld the No-Objection Certificate (NOC) required for the listing process.

NSE has resolved key regulatory issues and agreed to pay around Rs 1,800 crore to settle matters related to the co-location and dark fibre cases.

The Delhi High Court has also dismissed petitions challenging SEBI's approval process, removing another hurdle for the exchange's listing plans.

Domestic and Global Investors May Participate

Apart from PSU shareholders, several domestic and global investors are also expected to participate in the OFS. According to sources, potential sellers may include Morgan Stanley, Canada Pension Plan Investment Board (CPPIB), Temasek, OMERS, ChrysCapital, ICICI Lombard and TA Associates.

Other major sellers include Morgan Stanley with an estimated 16 million shares, and Canada Pension Plan Investment Board with about 11.87 million shares.

Their participation could make the issue one of the most closely watched offerings in the Indian capital market.

Listing Could Happen Around Diwali

The filing of the DRHP is the first step in the IPO process. After submission, SEBI will review the draft documents and may seek clarifications before granting final approval. Sources said the review process could take a few months. Subject to regulatory approvals and market conditions, NSE could make its stock market debut around the Diwali period this year.