NSE IPO expected by Q4, bourse focused on enhancing market participation: CEO Ashish Chauhan

National Stock Exchange (NSE) MD and CEO Ashish Chauhan said on Monday that the bourse's proposed initial public offer (IPO) is set to be rolled out by the fourth quarter, with the appointment of merchant bankers for the issue set to take place this month. The valuation of the bourse will be decided by merchant bankers, said Chauhan.

The CEO highlighted that capital market regulator SEBI has allowed lower float as the exchange does not have a large promoter. In other words, the regulator has permitted the bourse to list its shares without selling the usual large shareholding to the public in the proposed IPO.

Listed companies must maintain a minimum 25 per cent public shareholding, especially those with large promoter group shareholding. However, as NSE has no dominant promoter group, its ownership is already spread across several institutions such as banks and other financial entities. Hence, existing shareholders will not need to dilute too much shareholding immediately.

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However, NSE may still have to gradually increase its public shareholding to meet regulatory norms.

Global market volatility

Chauhan said that global market volatility is set to pose a limited impact on India as long as oil prices remain under control.

NSE’s focus, he said, is on increasing spot market participation and volumes.

He also said that the exchange has suggested introducing a minimum qualification criteria for traders in order to curb losses in the derivatives (futures and options) segment.

Long-term wealth creation

Chauhan asserted that investing in the market benchmark can deliver returns to the tune of 12-13 per cent over the long term.

Citing market data, he said that the Nifty50 has grown about 25 times from its base value of 1,000 in November 1995.

If one invested Rs 1,000 at the time and held on to their investment for the long haul, it would have grown to about Rs 28,000-30,000 (including dividends), he elaborated.

A long wait...

NSE made a major breakthrough this year when SEBI earlier this year issued an NOC for the proposed public offer.

The issuance of the NOC marks a major step in the listing process of the bourse after years of delays linked to governance and legal issues.

The exchange has been trying to list since 2016. The SEBI approval followed NSE's move to settle a case related to co-location and unfair access.

Last month, the CEO said that the proposed IPO will be entirely as an offer for sale (OFS) -- meaning no fresh equity will be issued in the process.

Experts say that NSE will most likely list its shares on the main rival bourse, BSE.

Currently, BSE's stock is listed on NSE.

Here are answers to frequently asked questions (FAQs) on the subject:

When is the proposed NSE IPO expected?

The NSE CEO has said that the exchange is aiming to roll out its IPO by the fourth quarter.

When will merchant bankers for the NSE IPO be appointed?

The CEO has said that merchant bankers are likely to be appointed in March.

Why has SEBI allowed lower public float for NSE?

The market regulator has permitted a lower float because NSE does not have a large promoter group.

What has the CEO said about global market volatility?

The CEO has said global volatility will have limited impact on India as long as oil prices remain under control.

What did the NSE CEO say about long-term wealth creation in equities?

He said that investing in benchmark indices like the Nifty50 can generate 12-13 returns over the long term.

What was the key breakthrough for NSE’s IPO this year?

SEBI issuing a no-objection certificate (NOC) for the IPO marked a major step after years of delays.

What will be the structure of the proposed IPO?

The IPO will be entirely an Offer for Sale (OFS).