Buzz Builds for India's NSE IPO: Valuation Soars to US$58 Billion

Excitement is growing in the private markets for the National Stock Exchange of India (NSE), the world's largest equity-derivatives exchange. Hopes of an upcoming public listing have pushed its valuation to an impressive US$58 billion (around Rs 5 lakh crore), as per news reports from the Economic Times.  

Why the High Hopes from NSE IPO? 

Wealthy investors and institutions are actively buying NSE's unlisted shares, betting on an Initial Public Offering (IPO) possibly as early as this year. This strong demand, far outstripping the available shares, has seen the stock trade for as much as 2,000 rupees (US$23) recently. This means its valuation has doubled in just four months, from US$36 billion in September. 

This surge in value is happening as the NSE works to resolve a long-standing legal issue with India’s financial regulator. This dispute has prevented the exchange from going public for almost a decade. If the IPO goes through, the NSE's US$58 billion valuation would be higher than Nasdaq Inc. and almost as high as Deutsche Boerse AG’s US$62 billion. 

Who Owns NSE Shares? 

The NSE has nearly 2.5 billion shares circulating in private markets. A significant portion, about 64%, is held by public investors, including local and foreign institutions, as well as wealthy individuals. 

The intense demand for these shares has made them scarce. Some market intermediaries have even had to return money to potential investors because they couldn't get enough shares, as some sellers decided not to sell, likely holding out for the expected IPO. 

Stepping Up in Derivatives Market 

Meanwhile, the NSE is also making moves in the equity derivatives market. After losing some market share to its listed competitor, BSE Ltd., NSE plans to change the expiration day of its derivatives contracts from Thursday to Tuesday to regain its market position.  

A Decade-Long Wait for Listing 

The NSE, supported by major investors like the Life Insurance Corporation of India and Canada Pension Plan Investment Board, first applied for an IPO back in 2016. However, an investigation by the regulator into claims that some high-speed traders unfairly accessed its systems not only stopped the listing but also led to a six-month ban from capital markets. 

Read more on: NSE IPO Buzz: Unlisted Shares in High Demand as Listing Nears 

Conclusion 

The rising valuation and strong private market activity suggest a significant level of confidence in NSE's future, especially with the anticipation of its long-awaited IPO. Resolving its legal challenges and its strategic moves in the derivatives market could pave the way for this major listing. 
 
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