NSE IPO: Why India’s largest stock exchange won’t receive any fresh capital from mega issue

The National Stock Exchange (NSE) is finally moving closer to the stock market after years of anticipation. Its proposed IPO could become one of India’s biggest public issues, with market estimates putting the potential size at around Rs 30,000 crore.

But there is an interesting note. NSE itself will not receive the money raised through the IPO.

Here’s a look at the how the issue is likely to pan out –

This is important to understand. The NSE IPO is structured as an Offer for Sale, or OFS.

Breaking down, this means that existing shareholders sell shares they already own to public investors.

So, that means NSE is not creating new shares for the IPO. Instead, some of its existing institutional shareholders will sell their holdings.

Now, imagine a company has 100 shares. An existing shareholder owns 10 of them and decides to sell five shares to the public through an IPO.

The company does not get the money from that sale.

The shareholder does. That is broadly what is happening with NSE.

Since the proposed issue is entirely an OFS, the shares being sold already exist. There is no fresh issue component through which NSE could raise money for expansion, technology investments, debt repayment or other corporate purposes.

So, even if the IPO eventually raises Rs 30,000 crore, the exchange itself will not receive those proceeds.

That raises another obvious question- the key reasons why the country’s largest exchange is getting listed.

The IPO would give NSE a public market valuation. Moreover, it will make its shares available for trading on the stock market.

For existing shareholders, it provides a route to sell part of their holdings.

The money generated from the OFS will flow to the shareholders who are selling their NSE shares, after applicable expenses and taxes. NSE does not receive the IPO proceeds.

That is the key point investors need to understand.

The final issue size, valuation, price band and other details will be known only once NSE moves ahead with the formal IPO process. However, the issue is estimated to be one of the largest in India, with the potential to be nearly Rs 30,000 crore.

If the issue eventually comes close to that size, it would be larger than some of India’s biggest public offerings in recent years.

For comparison, Hyundai Motor India raised around Rs 27,859 crore through its IPO in October 2024. LIC’s IPO in 2022 raised around Rs 20,557 crore.

That puts the potential NSE issue firmly in the spotlight.