NSE IPO: 5 PSUs to sell 2.37 crore shares in offer-for-sale

Five state-owned shareholders plan to sell a combined 2.37 crore shares in the National Stock Exchange through the upcoming initial public offering, according to the draft red herring prospectus filed with the Securities and Exchange Board of India.

The sellers include Life Insurance Corporation of India, State Bank of India, Bank of Baroda, Union Bank of India, and Indian Bank. LIC holds the largest block among the five, with 1.08 crore shares slated for the offer-for-sale. SBI will offload 48.4 lakh shares, Bank of Baroda 35.5 lakh, Union Bank 28.3 lakh, and Indian Bank 17.3 lakh.

The NSE IPO has been in the works for years. The exchange filed its first draft papers in 2017 but faced regulatory hurdles tied to the co-location trading case. SEBI cleared the revised filing in December 2024, setting the stage for what is expected to be one of India's largest public offerings.

The exchange did not disclose a valuation or price band in the draft papers. Analysts have estimated the NSE could command a valuation of $20 billion to $25 billion based on peer multiples and its dominant position in India's cash and derivatives markets. The NSE handles roughly 90% of equity derivatives trading and about 70% of cash market volumes.

The offer-for-sale structure means the proceeds will go to the selling shareholders, not the exchange. The NSE itself will not issue fresh shares. That limits the direct capital-raising angle but still gives the market a rare chance to buy into a quasi-monopoly franchise that has never been publicly traded.

For the five PSU sellers, the IPO offers an exit at what is likely to be a premium to their acquisition cost. LIC, SBI, and the other banks bought into the NSE at different points over the past two decades, with some holdings dating back to the exchange's demutualisation in 2005.

The timing matters. Indian equity markets have seen a flood of retail and institutional money over the past three years, pushing the NSE's own revenue and profit higher on higher trading volumes. The exchange reported a net profit of ₹4,637 crore for the financial year ended March 2024, up 42% from the previous year.

A successful listing would also give the NSE a market capitalisation that could rival or exceed the Bombay Stock Exchange's parent company, BSE Ltd, which trades at a market cap of roughly ₹45,000 crore. The NSE's larger market share and higher profitability justify a significant premium.

The IPO is expected to hit the market in the second half of 2025, subject to market conditions and regulatory approvals. The exchange has appointed Kotak Mahindra Capital, Morgan Stanley, and Goldman Sachs as lead managers.

For investors tracking the Indian exchange space, the NSE IPO is the marquee event. The question is not demand – it is how the pricing lands and how much room the listing leaves for post-issue gains.