‘Demand is unexpectedly large’: NSE CEO on IPO interest

Mumbai: The proposed initial public offering (IPO) of the National Stock Exchange of India (NSE) has received unexpectedly strong investor interest, with demand significantly exceeding the number of shares available for allocation, NSE Managing Director and Chief Executive Officer Ashishkumar Chauhan said on Tuesday.

Chauhan said the exchange was witnessing substantial demand from investors, although he did not provide a breakup between domestic institutional investors (DIIs) and foreign portfolio investors (FPIs), as the allocation process was still in progress. He said the anchor portion of the issue, earlier expected to be around Rs 9,000 crore, had been brought down to over Rs 6,000 crore even as overall investor interest remained considerably higher.

“Demand is unexpectedly large,” Chauhan said, pointing to the strong interest from a large pool of investors looking to acquire a relatively limited number of NSE shares.

The allocation will be carried out across various institutional investor categories, including domestic mutual funds, other domestic institutions and FPIs, in line with the applicable regulatory framework.

The NSE IPO will open for subscription on September 17 and remain open until September 21. The price band has been set at Rs 1,700-1,785 per share. The issue is entirely an offer for sale (OFS), under which existing shareholders will sell up to 12.64 crore shares. NSE itself will not issue any fresh shares through the IPO.

Chauhan said the size of the offer had been reduced from the earlier proposed 6.2 per cent stake to 5.11 per cent after some existing shareholders were initially hesitant to sell their holdings at the proposed valuation. NSE subsequently approached certain shareholders to participate in the OFS to meet the requirements for listing.

According to Chauhan, the listing will give existing shareholders a more transparent and liquid mechanism to sell their holdings. NSE shares are currently traded in the private market, where transactions can involve higher costs and challenges related to finding suitable counterparties.

The shares are proposed to be listed on the BSE, according to NSE's IPO note.

On the pricing of the issue, Chauhan said NSE's investment bankers had sought feedback from investors in both India and overseas markets, including large institutional investors, mutual funds, pension funds and retail participants. The pricing discussions also considered the need to ensure that retail investors had an opportunity to participate in the offering.

“There was feedback to leave something for retail investors,” Chauhan said.

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