NSE IPO likely to get SEBI approval by next month, say sources; issue may open in September
NSE IPO approval expected by next month.
Global investor roadshows begin July 17.
IPO likely to launch in September.
The National Stock Exchange’s (NSE) long-awaited initial public offering (IPO) is likely to move a step closer, with merchant banking sources expecting the Securities and Exchange Board of India (SEBI) to grant its approval by next month, clearing the decks for investor roadshows in key overseas markets before the issue is launched, likely in September, depending on market conditions.
According to merchant banking sources, “At the current pace, the issue is expected to get the green signal by next month. As all queries are promptly replied to from their side”. The person did not specify the kind of queries received but said, “Many times it’s about the language of the disclosure or the nature of the disclosure itself”.
Another source said, “As the key issue of co-location and dark fibre is already delinked from the IPO and is in the settlement process, the major issue is out; hence, the exchange and SEBI will have to focus on the rest of the things only in routine course”.
Expecting the August timeline, the sources said, for domestic investors, the road show is already planned. Merchant bankers have planned a global investor outreach programme for foreign investors from July 17 across key financial centres, like the United States, the United Kingdom, Hong Kong, and Singapore.
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If things go as planned, the exchange may launch its IPO in September. However, everything depends on SEBI’s observation letter.
However, NSE declined to comment on the timeline of IPO approval or roadshows. Responding to Moneycontrol’s queries, an NSE spokesperson said, “The Company has filed a DRHP with SEBI. We are unable to provide further comments at this stage.”
The person further stated, “Exchanges and all market infrastructure institutions follow disclosure norms like listed entities as per SEBI regulations, so much of the disclosure is anyway public”. He said, however, SEBI will have to do its due diligence.
IPO approval of other MIIs, the CDSL was the fastest
Though, despite MIIs following full disclosure, even if not listed, the IPO review timelines for BSE and MCX differed considerably. BSE Limited filed its Draft Red Herring Prospectus (DRHP) with SEBI on September 12, 2016, and received SEBI’s observation letter on December 30, 2016, so it took around 3.5 months.
In comparison, MCX IPO approval took around 7 months. filed its DRHP on February 23, 2012, while SEBI issued its observation letter on September 27, 2012, taking roughly seven months. The timelines vary significantly depending on the complexity of the issues, regulatory considerations, and the nature of queries raised during the examination of the draft offer document.
However, the timelines for depository IPOs were relatively shorter than those for some exchange listings. CDSL filed its DRHP with SEBI on January 27, 2017, and received the regulator’s observation letter on April 3, 2017, a review period of about 66 days. Similarly, NSDL filed its DRHP on July 7, 2023, and SEBI issued its observation letter on September 28, 2023, taking around 83 days.
Long road to listing
The proposed IPO would mark the culmination of nearly a decade-long effort by India’s largest stock exchange to list on the bourses.
NSE had originally filed its Draft Red Herring Prospectus (DRHP) with SEBI in December 2016, but the listing process was put on hold after the regulator raised concerns arising from the exchange’s co-location and dark fibre matters.
Last year, on June 20, NSE recently filed a settlement application for co-location and dark fibre matters and renewed its push for the IPO. On January 30, this year it received SEBI’s no-objection certificate (NOC) and started the preparation of the DRHP and filed for IPO on June 17 this year.
The expected approval next month would represent a significant regulatory milestone after years of back-and-forth between the exchange and the market regulator.
The issue will require the SEBI Chairman’s clearance
The NSE IPO is expected to be one of India’s biggest public offerings; the issue size is expected to be around Rs 30,000. Based on the issue size, the IPO will need the approval of the SEBI Chairman. As per the general order of SEBI’s delegation of powers, all issues of above Rs 10,000 crore require the chairman’s approval. The issue of Rs 5,000 crore to Rs 10,000 crore requires the SEBI Whole-Time Member’s approval. Executive Directors can clear issues of above Rs 750 crore and up to Rs 5,000 crore. Issues of less than Rs 750 crore can be cleared between the Deputy General Manager and the Chief General Manager.
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One of India’s most-awaited IPOs
NSE IPO is one of the most awaited issues that generated huge interest not only in institutional investors but also in retail investors. The exchange dominates India’s equity derivatives market and remains among the world’s largest derivatives exchanges by trading volumes. It has also reported strong financial performance in recent years, supported by rising retail participation and sustained growth in India’s capital markets.