NSE IPO coming soon: Sebi nods in principle to settle unfair market access case

Indian market regulator Sebi has approved in principle NSE’s settlement application in the long-running unfair market access case. This clears a major regulatory hurdle for the stock exchange’s long-awaited listing, according to a Reuters report. Sebi chairman Tuhin Kanta Pandey on Thursday said the regulator has accepted the settlement proposal in principle.He also said that the government has approved 2.5% equity dilution in the stock exchange and a notification in this regard will be issued soon. The development is seen as the strongest signal yet that the country’s largest stock exchange is finally getting closer to an initial public offering. Earlier, Pandey had said that a no objection certificate (NOC) for the public offer would be issued later this month.

Reuters had earlier reported that NSE planned to file its draft documents for the listing by the end of March. The exchange is believed to take place amid discussions with investment bankers and law firms to finalize the prospectus and assess investor appetite for what could become one of India’s largest-ever IPOs. Formal appointments of advisors are expected after Sebi issues the NOC.NSE, the world’s largest derivatives exchange by volume, has been trying to go public since 2016. Its listing plans have been repeatedly postponed due to regulatory scrutiny over fair market access through its co-location facilities, as well as broader governance issues.

The case is still pending in the Supreme Court. Last year, the exchange offered to settle the case by paying Rs 1,387 crore, a proposal that Sebi has evaluated.

The regulatory environment has also become more favorable. In 2024, Sebi lowered the minimum public float requirement for very large companies, allowing entities valued above Rs 5 lakh crore post-listing to dilute just 2.5% of equity, down from the earlier 5%.

This change was intended to ease the listing path for large issuers, including platforms with heavy infrastructure such as exchanges.Unlisted NSE shares are in demand again
Regulatory clarity has reignited strong interest in NSE stocks in the unlisted and gray markets. In recent days, prices of NSE’s unlisted shares have risen by around 10 to 15% as investors rushed to gain exposure ahead of a possible IPO.

Analysts say Sebi’s latest comments are widely interpreted as a turning point in a process that has been dragging on for almost a decade. With draft documents expected at the end of March, investors now see a greatly increased likelihood of an IPO in the coming months.

Unlisted trading platforms currently estimate NSE’s valuation at around Rs 5 lakh crore, with recent trades reported at around Rs 2,095 per share, although prices vary widely based on liquidity and deal size. NSE has not yet disclosed how many shares it plans to list or what valuation it is targeting.

Tejas, vice president of Marketplace at Qapita, said the investor reaction was not surprising. According to him, the exchange operates in a near duopoly market with very high entry barriers in terms of regulation, technology and capital. The renewed regulatory momentum has prompted buyers to step in, pushing unlisted prices higher in a short time.

Another factor complicating the listing is NSE’s unusually large shareholder base. With approximately 1,77,807 shareholders, it is India’s largest unlisted company by number of investors.

Lawyers working on the IPO are expected to design mechanisms to ensure fair exit opportunities for this broad shareholder base, with priority likely to be given to long-term institutional investors such as banks and foreign funds.

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