The National Stock Exchange (NSE) has formally restarted its long-delayed journey to the stock market by filing draft papers with the Securities and Exchange Board of India (Sebi) for an estimated $2-billion initial public offering (IPO). This move comes nearly nine years after its first listing attempt was derailed by the co-location controversy, according to an ET report.
Offer Details
The draft red herring prospectus (DRHP) proposes an offer for sale (OFS) of up to 14.89 crore shares with a face value of Re 1 each. Since the issue is entirely an OFS, NSE will not receive any proceeds from the IPO. Instead, existing shareholders will sell part of their holdings.
Major Shareholders Participating
Tiger Global has emerged as the largest shareholder participating in the issue, proposing to sell 1.48 crore shares, accounting for over 13% of the total offer size. Aranda Investments (Mauritius) and SAIF II-SE Investments are among the other major investors reducing stakes. Among domestic institutions, IDBI Bank plans to sell 74.15 lakh shares, SBI 64.28 lakh shares, and SBI Capital Markets 53.62 lakh shares. IFCI will offload 34.31 lakh shares, while HDFC Standard Life, Bajaj Holdings & Investment, and Bank of Baroda are also participating in the share sale.
Milestone After Regulatory Hurdles
The filing marks a major milestone for the exchange. Its original Rs 10,000-crore IPO proposal filed in 2016 was put on hold amid regulatory investigations into allegations of preferential access provided to certain algorithmic traders through its co-location facility. Momentum for the listing picked up earlier this year after Sebi issued a no-objection certificate, removing the final major regulatory hurdle. NSE subsequently appointed 20 merchant bankers and completed preparations for the issue following the announcement of its annual financial results.
Valuation and Market Position
Based on current unlisted market prices of Rs 1,950-2,050 per share, NSE is valued at around Rs 5 lakh crore, a level that would place it among the country's most valuable listed financial institutions. Nitant Darekar, research analyst at Bonanza, said, "NSE remains a capital-light near-monopoly. At around Rs 1,950-2,170 in the unlisted market, it trades near 45x FY26 earnings. That's rich, but below BSE at around 70x and MCX at around 80x." He added that the settlement of the long-running co-location case had removed a significant overhang that had clouded the exchange's listing prospects for years.
Co-Location Controversy Background
The co-location controversy dates back to 2015, when certain brokers were accused of receiving market data milliseconds ahead of rivals through preferential access to NSE servers. The matter led to years of investigations, governance reforms, and management changes at the exchange.
Risks and Market Impact
Darekar cautioned that the exchange's earnings remain closely linked to derivatives trading activity, which can be volatile, especially after regulatory changes in the futures and options segment. Recent curbs by Sebi on retail participation in the futures and options market have affected trading volumes and weighed on exchange revenues.
Market participants expect the IPO to be among the largest capital market events in recent years and a potential catalyst for India's primary market, which has seen a relatively muted start to the year. The listing would also provide investors with direct exposure to India's dominant exchange operator, which commands a near-monopoly in key trading segments and remains one of the most closely tracked names in the unlisted market.
