NSE IPO: Progress in Legal Hurdles Brings Listing Closer, Says Nuvama

In December 2024, Investors, led by the People Activism Forum approached the Delhi High Court, urging it to direct the Securities and Exchange Board of India (SEBI) to approve the National Stock Exchange’s (NSE) IPO. This follows SEBI's denial of a no-objection certificate (NOC) for the listing. Meanwhile, a recent report by Nuvama Institutional Equities highlights significant progress by NSE in overcoming legal challenges, bringing it closer to a potential listing.

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Background of the Case

According to an affidavit filed by the Forum, despite NSE reapplying for an NOC on August 27, SEBI has not offered any substantial reasons for withholding approval, even after three months.

The investors contend that SEBI's stance prevents NSE's shareholders from realizing the value of their holdings. Furthermore, it denies the general public an opportunity to invest in India’s largest stock exchange. The demand for NSE shares in the unlisted market has risen sharply, with prices doubling from ₹900 to ₹1,800 this year, driven partly by IPO anticipation.

NSE’s Major Shareholders

In November 2024, NSE issued a 4:1 bonus share allotment. Key shareholders include:

• Life Insurance Corporation (LIC): 10.72%
• Radhakishan Damani (D-Mart founder): 1.58%
• Stock Holding Corporation and SBI Capital Markets: 4.4% each
• State Bank of India: 3.23%
• Aranda Investments (foreign investor): 5%

Legal Developments and SEBI's Position

The Forum filed an initial petition in May 2024. SEBI instructed NSE to reapply for the NOC, which it did in August. However, SEBI has opposed the Forum’s petition, arguing that the group lacks the standing to pursue the matter and warning that a favorable judgment could encourage unwarranted third-party interventions.

SEBI has also cited unresolved concerns related to the co-location scam as a basis for withholding approval. While NSE has argued compliance with all relevant regulations and provided evidence of its communication with SEBI, the stock exchange has faced challenges since its initial IPO filing in 2016, which was withdrawn in 2019 due to the same scandal. SEBI eventually closed the case in September 2024, citing insufficient evidence.

IPO Seems Closer to Listing - Nuvama

Recent developments suggest the NSE IPO is gaining momentum, with a report by Nuvama Institutional Equities highlighting the exchange's progress in resolving major legal challenges. NSE has addressed key issues, including the co-location case, corporate governance concerns, and Trading Access Point (TAP) violations, clearing significant hurdles for its listing. As a result, NSE's unlisted shares have surged to ₹1,800, reflecting investor optimism.

Looking Ahead

The High Court is set to hear the case on March 6, 2025, with investors hopeful for a resolution that could expedite NSE's IPO process. Coupled with recent legal progress highlighted by Nuvama Institutional Equities, such as the resolution of major regulatory hurdles, there is growing optimism that NSE is now closer to achieving its long-awaited public listing.