NSE IPO: After long wait, large payday likely ahead for early backers

OFS could unlock huge gains for long-term shareholders, with SBI, Stock Holding Corporation and insurers sitting on decades-old stakes

Nearly 10 years after its first attempt to go public, the National Stock Exchange (NSE) is again moving towards a listing. The public issue is notable not just for its size, but also for the exceptional gains it might unlock for some of the exchange’s earliest institutional shareholders. 

NSE has filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (Sebi) for a proposed initial public offering (IPO) — entirely an offer for sale (OFS), with existing investors selling up to 148.9 million shares, or nearly 6 per cent of the exchange’s paid-up capital. 

Since there is no fresh issue of shares, NSE will not receive any money from the IPO. The proceeds will go to shareholders selling part of their holdings. 

 

Market participants estimate the issue size at about ₹30,000 crore, which would make it India’s largest public issue, overtaking Hyundai Motor India’s ₹28,000 crore offer in 2024. 

The scale reflects NSE’s position at the centre of India’s capital-market infrastructure. But the more striking story may be the conversion of decades of paper gains into realised value for institutions that entered the exchange when India’s markets were far smaller.  READ: NSE IPO journey moves ahead: Top 10 things investors should know from DRHP

Early holders, large gains

According to Bloomberg, State Bank of India (SBI), one of the major selling shareholders, could earn about ₹5,000 crore from the sale of 24.75 million shares — a gain of nearly 2,568 times on the stake SBI acquired between 1993 and 1999. The estimate is based on a grey-market price of ₹2,055 a share and SBI’s average acquisition cost of 80 paise a share. The calculation does not include the revaluation benefit on the stake SBI will continue to hold after the issue. 

Other shareholders participating in the OFS include MS Strategic (Mauritius), Canada Pension Plan Investment Board, Aranda Investments (Mauritius), Bank of Baroda, Stock Holding Corporation of India, General Insurance Corporation of India, National Insurance Company and United India Insurance Company. 

The likely gains are even sharper for some older institutional backers. Bloomberg reported that Stock Holding Corporation of India, which is expected to sell about 11 million shares, had acquired a large part of its holding at 46 paise a share. Based on the same grey-market price, the sale could give it a return of about 4,467 times. General Insurance Corporation of India, New India Assurance Company, National Insurance Company and Oriental Insurance Company, according to the report, could see returns of up to 6,422 times. 

Foreign investors are also likely to make substantial gains, with Singapore’s Temasek Holdings, which bought NYSE Euronext’s 5 per cent stake in NSE in 2010 for more than ₹780 crore, seeing a rise of about 33 times in value, according to Bloomberg.

What the NSE IPO unlocks

For long-term investors, the proposed IPO is more than an exit window: It marks the shift from private-market valuation to public-market price discovery. 

NSE shares have traded in the private market, but the absence of a listing meant liquidity was limited and valuations were not tested through a public float. A successful IPO would give both selling and non-selling shareholders a market-discovered price for their holdings. 

Life Insurance Corporation (LIC), which is NSE’s largest shareholder with a 10.72 per cent stake, will retain its entire stake. While the insurer will not receive sale proceeds, a listing could sharply revalue its holding. 

The OFS structure also means the IPO is primarily a liquidity event for existing shareholders, rather than a capital-raising exercise for NSE. NSE’s board had approved the long-delayed listing through an OFS in February this year and later invited existing shareholders to tender shares for the proposed issue.

Exchange dominance

NSE’s valuation is supported by its dominance in India’s equity and derivatives markets. 

According to the World Federation of Exchanges, NSE was the world’s largest multi-asset exchange in FY26, with an 11.38 per cent share of global cash equity trades and a 51.18 per cent share of global equity derivatives contracts traded. As of March 31, 2026, it had been the world’s largest derivatives exchange by number of contracts traded for seven straight years. 

Its financial performance has remained strong. For the January-March quarter, NSE reported consolidated net profit of ₹2,871 crore, an increase of 8.3 per cent over the same period a year earlier. Consolidated revenue from operations rose to ₹4,967.6 crore from ₹3,771.4 crore. 

For FY26, total income stood at ₹18,713.37 crore, compared with ₹16,352.06 crore in FY24. 

The exchange’s business model is helped by scale. Its DRHP says NSE has relatively low non-volume-linked expenses and strong profitability compared with global peers. Its activities span equities, derivatives, fixed income, commodities, clearing, listing and related services. The exchange has argued that low marginal costs allow it to add products and deepen participation without a proportional increase in expenses. 

The broader market backdrop has also worked in NSE’s favour. Rising financial savings, retail participation, digital account opening, institutional activity and India’s expanding listed market have boosted trading volumes. Higher liquidity attracts more investors and intermediaries, which can reinforce liquidity further.  READ | NSE files for ₹30,000 crore IPO: A look at its defining milestones

Risks for new investors

The IPO will not come without risks. 

NSE remains a systemically important and tightly regulated institution. It is supervised by Sebi, the Reserve Bank of India (RBI) and other regulators, and is subject to inspections, audits and compliance requirements. 

Its first listing attempt in 2016 was held up by regulatory and legal proceedings. The exchange has since tried to address parts of that overhang. Its revised settlement applications in the colocation and dark fibre matters, filed with Sebi in March 2026, were still pending as of the DRHP date.

 

Deepak Jasani, an independent market expert, said the IPO was likely to see strong investor interest because of NSE’s market leadership and the active private market in its shares. However, he also pointed to the risk of regulatory action in derivatives. Any measures that reduce futures & options (F&O) volumes could affect NSE more than the BSE because NSE is more dependent on trading activity, he said.

 

That risk is also reflected in the offer document. A large portion of NSE’s revenue comes from transaction charges, making earnings sensitive to market activity. Its dependence on F&O trading is particularly important at a time when regulators have tightened the framework for derivatives trading. Measures introduced in 2024 and 2025 have already had some impact on activity, according to the DRHP.

 

Technology is another concern. As a critical market infrastructure institution, NSE relies heavily on trading, clearing and settlement systems. The DRHP refers to the disruption on February 24, 2021, when trading was halted for nearly five hours and 24 minutes after telecom connectivity issues affected critical systems. Cybersecurity, system failures and third-party vulnerabilities remain continuing risks.

 

For early backers, the IPO may bring an unusually large payday after a long wait. For public investors, the question is different. NSE offers exposure to India’s dominant exchange platform and the long-term growth of capital markets. But the listing price will have to be weighed against regulatory scrutiny, derivatives concentration, technology risk and the sustainability of trading volumes.

 

(With inputs from agencies)