NSE cuts IPO size by 15% as investors trim sales before BSE listing

The National Stock Exchange (NSE) of India has cut its long-awaited initial public offering by about 15% after several large shareholders reduced the number of shares they plan to sell.

NSE on Friday, 11 September, set a price band of ₹1,700 to ₹1,785 a share. At the top of the range, the exchange would be valued at about ₹4.42 trillion, or $46 billion.

Existing shareholders will offer 126.44 million shares, down from 148.91 million proposed in the draft prospectus filed in June. The revised offer amounts to about 5.11% of NSE’s 2.475 billion outstanding shares, compared with roughly 6% earlier.

At the upper end of the price band, the IPO would be worth about ₹22,570 crore, or $2.36 billion. The issue is entirely an offer for sale. NSE is not issuing new shares and will receive no proceeds from the listing.

State Bank of India has cut its proposed sale to about 15.97 million shares from 24.75 million. Morgan Stanley’s MS Strategic (Mauritius) is offering 11 million shares instead of 16 million, while Bank of Baroda has reduced its sale to about 7.69 million shares from 10.99 million.

National Insurance Co., General Insurance Corporation of India, Stock Holding Corporation of India, Mahogany Ltd. and Indian Bank have also cut the number of shares they intend to sell.

SBI Capital Markets has joined the offer as a selling shareholder with about 8.78 million shares. Amit Kumar Lohia, who had proposed a much smaller sale, has withdrawn. Canada Pension Plan Investment Board and Aranda Investments Mauritius are among investors whose proposed sales remain unchanged.

The red herring prospectus does not give a common reason for the shareholders cutting their offers.

The lower-than-expected price range was the main reason some investors decided to sell fewer shares, Reuters reported on Thursday, citing three people familiar with the matter.

Some shareholders expect to obtain higher valuations in the secondary market after NSE lists, according to the report. The people also told Reuters that tighter derivatives regulation and weaker options trading had weighed on the valuation investors were prepared to give NSE.

That matters particularly for NSE because options trading accounts for a large share of its income. More than 60% of the exchange’s revenue comes from options transaction charges, according to its offer documents.

Sebi has tightened the equity derivatives market since late 2024. Measures have included larger minimum contract sizes and fewer weekly index expiries. The regulator said in a study last year that about 91% of individual traders lost money in equity derivatives in the year ended March 2025.

Taxes have also risen. The government increased the securities transaction tax on futures to 0.05% from 0.02% from 1 April, while also raising the rate on options.

NSE options turnover fell more than 12% from a year earlier in August, Reuters reported.

The exchange remains strongly profitable despite the slowdown in derivatives activity. Consolidated net profit rose 6.7% from a year earlier to ₹3,120 crore in the quarter ended June, while revenue from operations increased about 13% to ₹4,560 crore .

The listing follows years of regulatory disputes that held up NSE’s plans to go public.

Sebi gave the exchange a no-objection certificate for the listing in January. NSE filed its draft red herring prospectus in June.

Another major legal obstacle was removed last week. The Supreme Court on 4 September dismissed Sebi’s appeal in a decade-old case involving allegations that some high-frequency traders received unfair access to NSE systems.

The case was dismissed after the regulator agreed in principle to settle the allegations. NSE had said in July that it would pay about $155 million to settle the matter.

NSE filed its red herring prospectus on 10  September and formally announced the price band on Friday. Anchor investors are scheduled to bid on 16 September. The public offer will open 17 September and close on 21 September, with the shares scheduled to begin trading on BSE on 24 September.