India's long-delayed NSE IPO sets up $2.6 billion windfall for top investors

MUMBAI: Investors from Indian state-owned lenders to Singapore’s sovereign wealth fund and Canada’s national pension manager are set to reap a $2.6 billion windfall as India’s National Stock Exchange (NSE) moves ahead with a long-awaited listing.

NSE — the country’s largest bourse and the world’s most active derivatives exchange —filed draft papers for an initial public offering late on Wednesday, following years of regulatory delays.

The listing will be a pure offer-for-sale, with existing shareholders offering to sell about 6% of the exchange’s equity and no fresh equity raised.

NSE has more than 200,000 investors currently, and its shares trade at close to 2,000 rupees ($21.18) in the unlisted market, according to trading platforms. That suggests a valuation of some $57 billion, setting the bourse up to become the world’s fifth most valuable after London Stock Exchange Group.

The exchange may offer shares at a 5% to 10% discount to private market valuations, said three sources, including merchant bankers. The valuation under discussion is around 1,900 rupees per share, they added, declining to be identified as they are not authorised to speak to the media.

“At this valuation NSE would attract incoming investors while not short-changing existing ones,” one source said.

A final decision on pricing will be taken closer to listing, following investor roadshows.

At 1,900 rupees per share, the IPO would be worth $3.3 billion, making it one of India’s two largest public offerings alongside Mukesh Ambani’s Reliance Jio, which is likely to list this year in an IPO worth some $4 billion.

NSE said it could not comment beyond that it has filed an IPO prospectus when asked by Reuters about the valuation.

Windfall gains

The top 10 investors offering shares are set for a windfall worth some $2.6 billion, based on acquisition prices disclosed in the draft prospectus.

State Bank of India, the country’s largest lender, will lock in gains of about 47 billion rupees ($497.67 million), while MS Strategic (Mauritius), a Morgan Stanley fund, will make about 29.34 billion rupees, according to Reuters calculations based on prospectus disclosures and valuation estimates.

Singapore’s Temasek stands to make 20.67 billion rupees via its Aranda Investment arm, and Canada Pension Plan Investment Board will gain 18.71 billion rupees.

State Bank of India and Morgan Stanley did not immediately respond to emails seeking comment. CPPIB and Temasek declined to comment.

Anubhav Dayal, founder of Hong Kong-headquartered Soach Global Corporation, said its flagship fund first bought into NSE in early 2016 and is now selling 20% of its holding to provide liquidity to investors.

“It has proven to be a great investment. We saw the potential in NSE to serve India’s masses,” Dayal said, adding that the firm continues to hold NSE as a key investment. “NSE will continue to play an important role in India’s economic activity.”

Growth prospects and regulatory risks

The exchange is likely to begin IPO roadshows over the next two months, the sources said, adding that both domestic mutual funds and global funds have shown early interest in anchoring the issue.

The exchange’s revenue has more than doubled between April 2019 and April 2026 to about 187 billion rupees, driven by strong growth in options trading. However, growth has slowed over the past year after a series of regulatory curbs on derivatives.

The exchange, detailing regulatory risks in its filing, said revenue could continue to be impacted by government and regulatory measures aimed at tempering derivatives activity.

In its IPO papers, NSE said growth will hinge on continued expansion in first-time investors, rising trading activity, innovation in derivatives products and a push into commodities.

Ravi Varanasi, a former group president at NSE who now runs a consultancy advising Indian exchanges, said NSE’s near-total grip on the cash market gives it a strong long-term growth opportunity.

“As India’s market capitalisation deepens, cash trading volumes are expected to rise steadily,” he said.