The much-awaited National Stock Exchange (NSE) initial public offering (IPO) is set to open for investors.
Ahead of the opening of the issue, there are several questions around who can apply, how the issue is structured and whether existing NSE shareholders get any special advantage.
Let’s take a look at the 15 key questions investors may have before the NSE IPO opens for bidding.
1. Can existing NSE shareholders apply?
Yes, existing NSE shareholders can participate in the IPO, just like other eligible investors.
They can bid under the applicable categories. These include – Retail Individual Bidders (RIBs), Non-Institutional Bidders (NIBs) and Qualified Institutional Buyers (QIBs).
However, there is an important distinction. The IPO does not have a separate reservation category for existing NSE shareholders.
Any investment will also remain subject to regulatory ownership limits and other requirements.
2. When will the NSE IPO open?
The IPO will open for subscription on Thursday, September 17, and close on Monday, September 21. Anchor investors will be able to participate a day earlier, on Wednesday, September 16.
So, investors have a limited window to place or revise eligible bids.
3. How big is the NSE IPO?
The NSE IPO comprises an Offer for Sale (OFS) of up to 126,436,650 equity shares. Each share has a face value of Rs 1.
There is no fresh issue of shares. This means the IPO is entirely an OFS by existing shareholders. The issue size at the upper end of the price band, the issue size exceeds Rs 22,000-crore.
4. Will NSE get the IPO money?
No. This is one of the key points investors should understand.
Since the issue is an OFS, the proceeds will go to the existing selling shareholders. NSE itself will not receive the funds raised through the offering.
5. Where will NSE shares be listed?
The shares will be listed only on BSE. The Bombay Stock Exchange will act as the designated stock exchange for the issue.
If you are wondering why it can’t list on NSE, there is a regulatory factor. Under the applicable Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, a recognised stock exchange cannot list its own securities on its own trading platform.
6. How will the IPO shares be divided?
The Qualified Institutional Buyer (QIB) category can receive up to 50% of the net offer. The Non-Institutional Bidder category will get at least 15%, while Retail Individual Bidders will have at least 35% reserved.
7. Is there an employee quota?
Yes, NSE employees will have a separate Employee Reservation Portion of up to Rs 70 crore. The portion is capped at 5% of the post-offer equity capital.
Eligible employees can apply for up to Rs 5 lakh, subject to the applicable conditions and employee discount, if any.
8. Who is selling shares?
Several existing shareholders are participating in the OFS. They include State Bank of India, Canada Pension Plan Investment Board, Aranda Investments (Mauritius) Pte Ltd, MS Strategic (Mauritius) Limited and The New India Assurance Company, among others.
9. NSE IPO: How much can retail investors apply for?
A Retail Individual Bidder is an individual investor, including eligible Hindu Undivided Families (HUFs) and Non-Resident Indians (NRIs), whose total bid amount does not exceed Rs 2 lakh.
10. What about Non-Institutional Bidders?
The NIB category for the NSE IPO is divided into two segments. Small NIBs, with bids between Rs 2 lakh and Rs 10 lakh, will get one-third of the NIB portion.
The remaining two-thirds will be available for Big NIBs, whose bids are above Rs 10 lakh.
11. How can investors make payment?
Public investors must use the Application Supported by Blocked Amount (ASBA) mechanism, under which the application money remains blocked in the bank account.
Individual investors applying for amounts up to Rs 5 lakh must use the Unified Payments Interface (UPI) mechanism.
12. NSE IPO: Are there ownership limits?
Yes, individual resident shareholders cannot hold more than 5% of the paid-up equity share capital of a recognised stock exchange without prior approval from the Securities and Exchange Board of India (SEBI).
Certain institutional entities can hold up to 15%, while total non-resident ownership is capped at 49%.
13. What does ‘fit and proper’ mean?
Investors holding 2% or more, as well as prospective bidders covered by the applicable rules, must satisfy the “fit and proper” requirements and make the required declaration in the Bid-cum-Application Form.
14. Can investors withdraw their bids?
Retail investors and eligible employees can revise or withdraw their bids until 5 p.m. on the closing day.
However, Qualified Institutional Buyers and Non-Institutional Bidders cannot withdraw or reduce their bids after submission.
15. What is NSE’s equity capital?
The face value of every NSE equity share is Re 1. The company has 2.475 billion paid-up equity shares both before and after the offer.
For investors, the key thing to understand is that existing NSE shareholders can apply, but they do not get a separate shareholder quota. The IPO is an OFS, NSE itself will not receive the proceeds, and the shares will be listed exclusively on BSE.
NSE IPO: The big issue this week
All in all, the NSE IPO is the big issue to watch this week. Not only is the anticipation about the issue building, experts are also factoring in the potential price at which the IPO might list finally.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.