NSE IPO: Top shareholders trim stake sales as investors expect higher post-listing valuation
The overall issue size will be reduced to 5.2% of NSE’s total equity capital from 6% earlier, the sources said.
Certain major shareholders in India's National Stock Exchange (NSE) are lowering the number of shares they plan to sell in the company's upcoming IPO, anticipating a significant increase in share value following its listing on the stock exchange, according to three sources. The IPO will be an offer-for-sale, with existing shareholders selling shares, rather than raising new capital.
Shares are anticipated to be priced within a range of ₹1,700 to ₹1,785 per share, which would make the IPO worth approximately ₹22,600 crore ($2.37 billion). This valuation would lag behind a public offering by Mukesh Ambani's Reliance Jio, which is expected to raise $3.8 billion, and Hyundai Motor India's $3.3 billion issue in 2024.
Several prominent investors, including National Insurance Co. of India, General Insurance Company, Stock Holding Corporation, MS Strategic (Mauritius) - a Morgan Stanley fund, and Mahogany Ltd, a Singapore-based investment firm, are reducing the shares they will sell this month. The reduction in share sales is primarily attributed to the lower-than-expected price band.
Shareholders believe they will achieve a better valuation for their shares in the secondary market post-listing. The lower price band has been influenced by tighter market rules, such as recent changes in retail participation in options trading, stricter bank funding regulations, higher taxes on derivatives trading, and the introduction of India's new closing auction session.
These factors have contributed to a decline in trading volumes and a subsequent drop in options volume, which in turn has negatively impacted the IPO valuation.
Nearly 60% of NSE's revenue is derived from options transaction charges, and the exchange's options turnover saw a decline of more than 12% year-on-year in August. The NSE and the mentioned shareholders have not yet responded to requests for comment. Bank of Baroda and Indian Bank have also reduced their planned share sales, as notified to the local stock exchange.
Consequently, the overall issue size will be adjusted to 5.2% of NSE's total equity capital, down from the previously planned 6%. The number of shares being sold by shareholders will decrease from 149 million to 126 million.
Written by urgent.news from Hindu BusinessLine's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
