NSE taps Sebi for IPO even as banks plan to offload shares

MUMBAI: The National Stock Exchange of India Ltd (NSE) has formally approached the stock market regulator for an initial public offering (IPO) of its shares, even as two state-run lenders have started selling some of their NSE shares ahead of the IPO.

A spokesperson for NSE, India’s largest stock exchange, confirmed the IPO plan. “We have asked the Securities and Exchange Board of India (Sebi) for approval and only once this comes, will we start the IPO process. We have not spoken to merchant bankers so far, as we are awaiting regulatory clarity,” the spokesperson said.

Meanwhile, banks that hold shares in NSE have invited expressions of interest to sell some of them before the end of the fiscal year. Last week, State Bank of India (SBI), India’s largest bank, announced plans to sell 5 million NSE shares, representing 1.01% of the 5.19% it holds in the exchange.

“SBI is one of the shareholders of National Stock Exchange of India Ltd and intends to divest up to 1.0101% (50,00,000 equity shares) of its equity shareholding in NSEIL (National Stock Exchange of lndia Ltd) through a competitive bidding process,” the lender said in a public notice on 3 January. In 2016, SBI had sold 5% stake in NSE to Mauritius-based Veracity Investments for ₹911 crore. State-run Indian Bank also aims to sell 1 million shares in NSE, according to a newspaper advertisement. Last month, IFCI had sold its entire 2.44% stake in NSE for ₹805.6 crore.

Bankers say the plans are part of a routine exercise to monetize non-core assets.

“Sebi has given time for the IPO and there are buyers in the market. We don’t foresee any problem. If it materialises, we will give it up in IPO. There has been a clear-cut direction from the government and, gradually, we will go out of the non-core business. You are seeing an interest among investors. Last time there were regulatory issues,” a senior banker said who did not want to be named.

Sebi had previously pulled up NSE over select brokers securing privileged access to its servers as part of the exchange’s co-location services, an issue that had become a hurdle to its listing plans.

“In consonance with the Sebi and Securities Appellate Tribunal (SAT) rulings, we are continuing to transfer revenues arising out of co-location services in the escrow account,” the NSE spokesperson told Mint.

“Banks selling non-core assets is a routine exercise that they undertake during book closing to reflect better numbers. NSE shares have a lot of demand in the open market. The NSE shares typically trade at a valuation of more than ₹1,000 per piece, valuing the company at more than ₹45,000 crore,” said an investment banker who did not wish to be named.

NSE aims to raise about ₹10,000 crore from the IPO, which would result in existing promoters selling 22-24% of their stakes.