NSE IPO: What sets India’s second-largest issue apart? A token sale

NSE, the Rs 22,569 crore mega IPO and India’s second-largest ever, sailed through with ease on Day 2 itself, drawing 20.4 lakh applications so far, despite being entirely an offer for sale (OFS).

What sets the issue apart is that large institutional investors, including NSE’s biggest shareholder, Life Insurance Corporation of India Ltd (LIC), stayed out of the IPO. The absence of large shareholders from the sale made the issue less about existing investors cashing out and more about a limited or 'token' sale, showcasing their continued confidence in India’s largest stock exchange and its untapped growth potential.

This institutional confidence was visible in NSE’s anchor book, which was subscribed nearly Rs 1.2 lakh crore, or about 20 times the book size, with shares allotted to as many as 189 investors, including 98 mutual fund schemes and 27 life insurance companies.

NSE does not need to raise fresh capital because it is highly profitable and returns most of its free cash flow to shareholders as dividends, NSE Managing Director and CEO Ashishkumar Chauhan told reporters last week in an address in New Delhi.

Token sale

Among NSE’s key selling shareholders, Aranda Investments (4.54 per cent pre-IPO stake), Stock Holding Corporation of India (4.44 per cent), SBI Capital Markets (4.33 per cent) and ChrysCapital (3.73 per cent) are looking to offload just 7 per cent of their stakes on average.

Data showed Crown Capital offered 11 per cent of its pre-OFS holdings, while TA Asia Pacific reduced its holdings by 6 per cent. LIC, as mentioned above, is not among the selling shareholders. The largest life insurer in India held a 10.72 per cent stake, or 26.5 crore shares, in NSE.

Out of NSE’s 20 institutional shareholders, nine are foreign institutional investors that collectively hold a 15.96 per cent stake, while 11 are domestic institutions, comprising 10 PSU entities along with ICICI Lombard General Insurance, collectively owning 20.86 per cent.

India’s low stock-market penetration of 13.5 per cent provides substantial participation headroom, supporting NSE’s long-term growth prospects, said Aditya Birla Money, calling NSE a leadership at scale, with balanced risk-reward.

Also read: NSE IPO: SGX, LSEG, ICE and CME Group - how NSE compares with global peers

Big IPOs

NSE’s 1.16 times subscription by Day 2 compares with Hyundai Motor India Ltd, India’s largest IPO, which was subscribed 42 per cent by Day 2 of its offer in 2024. LIC’s issue was fully subscribed at 1.03 times by Day 2, while issues by One 97 Communications Ltd (Paytm) and Tata Capital Ltd were subscribed on Day 3 of their respective offers.

In the case of Hyundai Motor, parent Hyundai Motor Company was the selling shareholder. In the case of LIC, the government was the selling shareholder. In the case of Tata Capital, Tata Sons and International Finance Corporation (IFC) were selling shareholders in the OFS. NSE does not have an identifiable promoter. A total of 67.50 per cent of NSE was owned by public shareholders and the rest, 32.50 per cent, by trading members and associates, pre-IPO.

For funds such as CPPIB, Morgan Stanley Strategic and Temasek’s Aranda, IPO-stage partial sales are standard practice, crystallising some gains and IRR after a long holding period while retaining the residual stake.

NSE is an near-monopoly share in every asset class, said Spark Capital adding that it is one integrated stack, with earning at every layer: trading, clearing via NCL, the Nifty index franchise and market data. The brokerage, which suggested 'Subscribe from the long-term perspective' on the issue said NSE is debt-free, cash-rich, and dividends it paid nearly doubled to Rs 8,662 crore in FY26.

Citing the broader market forecasts, Spark Capital said cash market turnover is projected at Rs 473–507 lakh crore by FY30, growing at 14–16 per cent annually. Equity futures turnover is projected to grow 16–18 per cent and equity options premium 9–11 per cent. Data centres, listing, index licensing and clearing are seen compounding 15–25 per cent as well, Spark said while suggesting  'Subscribe with long-term' rating on the issue.

"We believe NSE’s strong franchise, significantly larger scale and established market ecosystem provide a solid base to navigate the evolving derivatives landscape. Given the structural growth potential of Indian capital markets, we assign a “Subscribe” rating with a positive long-term outlook," Nirmal Bang Securities said.

Big bets on growth
At least 17 brokerages recommended 'subscribe' on the issue, whose size was cut to 12.64 crore shares from the 14.89 crore shares proposed in the UDRHP. As suggested by anchor demand and token sale by existing shareholders, the reduction in offer size does not suggest weak demand, but sustained bullishness among incumbents to stay invested.

According to Raj Gaikar, Equity Research Analyst at SAMCO Securities, the IPO offers investors a chance to participate in one of India’s strongest market infrastructure businesses. In FY26, NSE accounted for 92.99 per cent of India’s cash-market turnover, 99.79 per cent of equity futures and 74.71 per cent of equity options based on premium turnover. It has remained the country’s largest exchange by cash-market and equity-derivatives turnover for several years.