NSE IPO Moves Closer as SEBI Grants In-Principle Approval to Settlement Plea; Govt Clears 2.5% Stake Sale

The Securities and Exchange Board of India (SEBI) on Thursday granted "in-principle" approval to the National Stock Exchange's (NSE) settlement plea, marking a major regulatory breakthrough that brings India's largest stock exchange closer to its long-awaited initial public offering (IPO).

NSE IPO Soon: SEBI Grants In-Principle Approval to NSE Settlement, IPO Process Moves Closer

SEBI chairman Tuhin Kanta Pandey confirmed the development, calling it a significant step in resolving long-pending issues that had stalled NSE's listing plans for nearly a decade.

NSE has been attempting to go public since 2016, but its IPO plans were repeatedly delayed due to the unresolved co-location case. The case involved allegations that certain brokers were given unfair and preferential access to NSE's trading systems, raising serious governance and market integrity concerns.

To settle the matter, NSE proposed a settlement amount of Rs 1,387-1,388 crore, payable in 2025. SEBI's in-principle approval signals regulatory acceptance of the proposal, though the matter continues to remain under judicial consideration before the Supreme Court.

This approval clears one of the biggest regulatory roadblocks and moves NSE closer to receiving the final No Objection Certificate (NOC) required to proceed with its public issue.

Government Clears Stake Dilution

Alongside SEBI's approval, the central government has also agreed to allow a 2.5 percent equity dilution in NSE as part of the IPO. A formal notification is expected shortly. This move aligns with SEBI's revised listing norms introduced in 2024.

Under the updated rules, companies with an expected valuation of over Rs 5 lakh crore are allowed to list with a minimum public float of 2.5 percent. Earlier, such companies were required to offer at least 5 percent of their equity to the public.

NSE IPO Timeline Takes Shape

NSE managing director and chief executive officer Ashish Kumar Chauhan described SEBI's in-principle approval as "good news" and said the exchange is awaiting official communication. Once the NOC is received, NSE is expected to take around four months to prepare and file its Draft Red Herring Prospectus (DRHP). From the issuance of the NOC to the actual IPO, the entire process is estimated to take more than seven months.

According to a Reuters report, NSE is targeting the submission of its draft IPO papers by the end of March. The exchange is already working with investment bankers and law firms on the draft prospectus and valuation framework, with formal adviser appointments expected after SEBI issues the final clearance.

NSE Unlisted Shares Surge 10-15% Ahead of IPO Clarity

Regulatory clarity has revived investor interest in NSE shares in the unlisted market. NSE shares have reportedly risen 10 to 15 percent in recent days, trading at around Rs 2,095 per share on unlisted platforms. These transactions imply a valuation close to Rs 5 lakh crore, although actual pricing varies depending on liquidity and deal size.

NSE has not yet disclosed how much equity it plans to offer or the valuation it will seek in the IPO, leaving price discovery to informal markets for now.