NSE IPO Updates: LIC to Retain 10.72% Stake; SBI, GIC Re and Other Shareholders Plan OFS

Life Insurance Corporation of India (LIC) is set to retain its substantial holding in the National Stock Exchange (NSE) as the country's largest stock exchange moves closer to its much-awaited public listing. According to NSE's Draft Red Herring Prospectus (DRHP), LIC owns 10.72% of NSE, making the state-owned insurer the exchange's largest shareholder.

The decision assumes significance as several other existing shareholders are looking to monetise their holdings through the proposed initial public offering. While LIC has opted to remain invested, shareholders including State Bank of India (SBI), Bank of Baroda, General Insurance Corporation of India (GIC Re), New India Assurance, United India Insurance, National Insurance Company, Canada Pension Plan Investment Board (CPPIB) and Aranda Investments are among those linked to the Offer for Sale (OFS) component.

LIC Holds Firm on NSE Stake as IPO Draws Closer

LIC's continued investment gives it a prominent position in NSE's ownership structure. The insurer holds around 26.53 crore NSE shares, representing 10.72% of the exchange's equity. The holding also places NSE among LIC's more valuable investments, despite the stock exchange remaining unlisted at present.

The insurer's decision not to participate in the OFS signals a longer-term approach towards its NSE investment rather than treating the IPO as an immediate opportunity to exit. ETMarkets had earlier reported that LIC intends to hold its NSE stake, citing the exchange's long-term value creation potential.

Other NSE Shareholders Prepare to Sell Through OFS

LIC's stance contrasts with that of several other shareholders that are expected to participate in the secondary sale.

The NSE IPO is structured as an Offer for Sale, meaning the proceeds from shares sold in the issue will go to participating existing shareholders rather than to NSE itself. Several institutional investors and public-sector entities are therefore looking to unlock the value of their long-held investments as the exchange approaches the market.

SBI and SBI Capital Markets are among the major shareholders associated with the proposed sale, while public-sector insurance companies and other institutional investors are also expected to reduce portions of their holdings.

NSE IPO Size Cut From Earlier Rs 30,000 Crore Plan

Meanwhile, the proposed NSE IPO has undergone a significant change in its expected size. According to a report by The Economic Times citing sources, the exchange is now looking to raise around Rs 22,500-23,500 crore, substantially below the earlier expectation of an issue size of nearly Rs 30,000 crore.

The reduction would still leave the NSE IPO among India's largest proposed public offerings, underlining the scale of investor interest surrounding the exchange's long-awaited listing.

Why LIC's NSE Stake Matters

LIC's decision to retain its holding is notable because the insurer has historically maintained sizeable positions in several of India's largest listed companies, including Reliance Industries, ITC, HDFC Bank, State Bank of India, ICICI Bank and Tata Consultancy Services.

Its NSE investment, however, is distinct because the exchange is yet to be publicly listed. A successful IPO could therefore provide a market-based valuation for LIC's holding and potentially unlock substantial value without the insurer having to sell its shares.

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