NSE IPO: Nithin Kamath recalls how NSE supported Zerodha in its early years

Zerodha founder and CEO Nithin Kamath has recalled the National Stock Exchange's (NSE's) support during the early years of his brokerage business, saying he personally feels a "sense of obligation" towards the exchange ahead of its much-awaited initial public offering (IPO).

In a recent LinkedIn post, Kamath said Zerodha considered becoming a brokerage firm in 2010 partly because of NSE NOW, a free trading platform that NSE offered for brokers to provide to their clients.

"Back in 2010, one of the reasons we even considered becoming a brokerage firm was because of NSE NOW. It was a free trading platform provided by the NSE India that brokers could offer to their clients," Kamath said.

He recounted that when Zerodha approached the exchange for membership in Chennai, the experience was different from the "scary stories" he had heard about exchanges.

"While we were starting out, I had heard a lot of scary stories about the exchanges, but our experience was the total opposite. When we went to Chennai to inquire about a membership, they were incredibly welcoming. When they realised we didn't have a lot of money, they even waived our membership fee of ~₹5 lakh. This is just one of many instances where the NSE was more than gracious throughout our journey," he said.

Kamath added that NSE's support was particularly significant when Zerodha was starting out and did not have the resources to build its own trading platform.

"In many ways, we are around only because of the NSE. When we started, we didn't have the money to build our own trading platform. If there is one company I personally feel a sense of obligation towards, it is the NSE," he said.

On the upcoming IPO, Kamath said he expected the NSE issue to be successful, while clarifying that his comments were not an investment recommendation.

"Given that it is NSE, I have no doubt that it will be a successful IPO (PS: this is not a recommendation)," he said.

NSE IPO details

The NSE IPO will open for public subscription on September 17 and close on September 21. The anchor book will open on September 16, according to the company's red herring prospectus (RHP).

The issue comprises an offer for sale (OFS) of 12.64 crore equity shares, compared with 14.9 crore shares proposed in the draft red herring prospectus (DRHP). This represents a reduction of around 15 per cent in the number of shares on offer.

The price band has been fixed at Rs 1,700-1,785 per share. At the upper end of the price band, the IPO is estimated to raise around Rs 22,569 crore. As the issue is entirely an OFS, the proceeds will go to the selling shareholders.

The NSE IPO's grey market premium (GMP) stood at Rs 210. At the upper price band of Rs 1,785, this implies a price of Rs 1,995, or a premium of 11.76 per cent over the upper issue price. GMPs are unofficial indicators and do not guarantee the listing price.

The tentative listing date for NSE shares is September 24.