Breaking: NSE IPO to open on Sept 17, listing on Sept 25; price band pegged at ₹1,700-1,785

The highly anticipated initial public offering (IPO) of the National Stock Exchange (NSE) is likely to hit Dalal Street on September 17 and close on September 21, with the exchange targeting a listing around September 25, industry sources told Fortune India.

NSE is likely to announce the price band for the issue tomorrow, with the IPO price pegged at around ₹1,700-1,785, a source said.

The country’s largest exchange filed its updated draft red herring prospectus (UDRHP) with the Securities and Exchange Board of India (Sebi) on Wednesday. The exchange received Sebi’s green signal for the IPO on September 4, after filing its draft red herring prospectus (DRHP) with the regulator in June.

The proposed IPO size is expected to be lower than the nearly ₹30,000 crore indicated in the original DRHP, as several existing shareholders, including public-sector insurance companies and Morgan Stanley, have scaled back the number of shares they intend to sell through the offer for sale (OFS), the source said.

“The issue size is reducing on account of some shareholders not wanting to sell now through the OFS because they think they will get a better price later on,” the source said. “Regarding pricing, it has been made more attractive for small investors to benefit in OFS,” he added.

The reduction in the offer size comes despite strong investor interest in the much-awaited listing, with NSE shares continuing to command a premium in the grey market. The IPO’s grey market premium (GMP) stood at around ₹255 as of September 9, up from ₹245 on September 8, but below ₹285 on September 7. The GMP was around ₹200 on September 4.

There is speculation in the market that NSE could trim the stake offered in the IPO to around 5.5%, as some shareholders are understood to have decided against selling at the proposed valuation. According to the DRHP, NSE had proposed an OFS of 14.89 crore shares, equivalent to nearly 6% of the exchange’s total equity.

The IPO, however, will remain a pure OFS, meaning NSE itself will not receive any proceeds from the issue. The entire amount raised will go to the existing shareholders selling their stakes.

What will change in the OFS?

The OFS has undergone several changes between the DRHP and the RHP, with a number of existing shareholders reducing their proposed sale, one new selling shareholder being added and one shareholder named in the DRHP no longer appearing in the RHP.

State Bank of India has reduced the number of shares proposed to be sold to 15.97 million from 24.75 million in the DRHP. MS Strategic (Mauritius) has cut its proposed sale to 11 million shares from 16 million.

Bank of Baroda will now sell 7.69 million shares, compared with 10.99 million proposed earlier, while Stock Holding Corporation of India has reduced its OFS to 6.19 million shares from 10.89 million.

General Insurance Corporation of India has also cut its proposed sale to 6.19 million shares from 10.66 million. National Insurance Company will sell 4 million shares, down from 6 million, while Mahagony Limited has reduced its proposed OFS to 3 million shares from 5 million.

Indian Bank has also lowered its proposed sale to 1.50 million shares from 2.48 million.

Meanwhile, SBI Capital Markets Limited (SS) has been added as a selling shareholder in the RHP and will offer 8.78 million shares through the OFS.

Amit Kumar Lohia, who had proposed to sell up to 25,000 shares in the DRHP, does not appear as a selling shareholder in the RHP.

What remains unchanged?

The proposed OFS quantities of several other selling shareholders remain unchanged between the DRHP and RHP. These include Canada Pension Plan Investment Board, Aranda Investments, The New India Assurance Company, United India Insurance Company, Crown Capital, Ontario Inc., The Oriental Insurance Company, ICICI Lombard, TA Asia Pacific Acquisitions, Soach Global Strategic Holdings, Be-In Eight, Rajiv Bolla, Shaik Samdani Basha and Mahesh Gupta.