“With the approval of SEBI, we embark on a new chapter of value creation for all our stakeholders. This approval also strengthens confidence in NSE as an integral part of the Indian economy and a beacon of the Indian capital markets.”
With Sebi’s nod, NSE is expected to move closer to finalizing the structure and timing of its IPO, although the exchange is yet to make an official announcement. According to an earlier Reuters report, NSE is said to be planning to file draft listing papers by the end of March and is in talks with investment bankers and law firms to finalize the prospectus and assess investor appetite.
The NSE listing is expected to attract significant investor attention due to its dominant role in the Indian equity and derivatives markets and its broad shareholder base of institutions and retail investors.
NSE, the world’s largest derivatives exchange by trading volumes, has been trying to list its shares since 2016. However, this plan was held up due to regulatory investigations related to the co-location facility and broader governance issues. The case is still pending in the Supreme Court. Last year, NSE offered to settle the case by paying Rs 1,387 crore.
The regulatory environment has also become more supportive in the recent past. Sebi has relaxed public float norms for very large companies, allowing companies valued above Rs 5 lakh crore to sell only 2.5% of their shares after listing, instead of the earlier requirement of 5%. The measure was intended to make it easier for large platforms, including exchanges, to tap public markets.
Speculation surrounding NSE’s IPO has increased demand for its shares in the unlisted market, with prices rising around 10-15% in the past two months. NSE is also notable for its unusually large shareholder base for an unlisted company, with approximately 1,77,807 investors, making it the most widely distributed unlisted company in India.
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 act, sending unlisted prices soaring in a short time.
On the financial front, NSE reported a 33% decline in profit after tax in the September quarter, while consolidated revenue from operations fell 18% from a year earlier. The figures highlight that, despite its strong market position, the exchange’s revenues remain sensitive to changes in regulations and market conditions.
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