The National Stock Exchange of India (NSE) has moved a step closer to reviving its long-delayed Initial Public Offering (IPO) after receiving a key regulatory clearance from the Securities and Exchange Board of India (SEBI). This development marks an important turnaround for an IPO that has been stuck since 2016 due to regulatory and governance issues.
While the approval has raised expectations of a public listing, the IPO is still a multi-step process. To understand where NSE stands today, it is important to look at what happened earlier, why a settlement was necessary, and how the IPO is expected to be structured.
SEBI has given NSE an in-principle approval (No Objection Certificate) to proceed with its IPO process. This clearance came after NSE agreed to resolve its long-pending regulatory issues through a settlement mechanism.
This approval does not mean the IPO is launching immediately. It only allows NSE to restart formal preparations, including drafting its IPO documents.
What Happened in 2016 and Why the IPO Was Stopped?
NSE had first planned to go public in 2016 and had filed IPO papers. However, during this period, SEBI initiated investigations into serious governance lapses at the exchange.
The main issue was the co-location controversy, which raised concerns about fairness and transparency in market operations. As a result:
-
SEBI scrutiny intensified
-
Governance standards at NSE were questioned
-
IPO permission was effectively put on hold
Eventually, NSE withdrew its IPO papers, and the listing plan remained suspended for several years.
All SEBI Approved IPO List Read Here
What Was the Co-location Case?
The co-location case related to how some brokers allegedly got faster access to market data by placing their servers closer to NSE’s systems.
SEBI found that:
-
Certain brokers may have benefited unfairly
-
Internal controls and oversight at NSE were weak
-
Governance standards did not meet regulatory expectations
Because NSE is a market infrastructure institution, SEBI applied stricter scrutiny compared to normal companies.
Why Was a Settlement Required?
SEBI made it clear that NSE could not go public unless all legacy regulatory issues were closed.
To move forward:
-
NSE opted for a settlement route under SEBI regulations
-
This involved monetary payments and compliance commitments
-
Settlement helps close old cases without admitting or denying guilt
Only after agreeing to this settlement did SEBI issue the in-principle IPO clearance.
Who Will Sell Stake in the NSE IPO?
The NSE IPO is expected to be entirely or largely an Offer for Sale (OFS), meaning no fresh capital will be raised.
Likely sellers include long-term institutional shareholders such as:
-
Life Insurance Corporation of India (LIC)
-
State Bank of India (SBI)
-
Stock Holding Corporation of India
-
Morgan Stanley
-
Aranda Investments
-
SAIF Partners and other early financial investors
These investors have been holding NSE shares for many years and are expected to partially monetise their holdings through the IPO.
Expected IPO Structure, Market Cap and Size
Based on unlisted market valuations and analyst estimates:
-
Expected market capitalisation: ₹4.5–5 lakh crore
-
Estimated IPO size: ₹30,000–40,000 crore (depending on stake sold)
-
IPO type: Offer for Sale (no fresh issue expected initially)
If listed at these levels, NSE would rank among the most valuable listed companies in India.
What Happens Next?
-
Completion of the settlement process with SEBI
-
Appointment of merchant bankers and advisors
-
Filing of Draft Red Herring Prospectus (DRHP)
-
SEBI review and regulatory queries
-
Final approval and IPO launch
The full process is expected to take 6–8 months or more, subject to regulatory timelines.
The latest SEBI approval has reopened the door for NSE’s long-awaited IPO, which has been stuck since 2016 due to regulatory and governance concerns. The settlement of past cases was a critical condition, and its progress has allowed NSE to move forward.
While the IPO is still some distance away, the direction is now clear. With a potential valuation of nearly ₹5 lakh crore and participation from marquee institutional investors, the NSE IPO could become one of the largest and most significant listings in India’s capital market history.
Also Read – IIFL Home Finance IPO: Separate Listing Plan, Shareholder Quota IPO Likely
Also Read- SEBI Approved IPO List | Mainboard IPOs in India | Approval Status List
1 thought on “NSE IPO Back on Track Gets SEBI Clearance: What Went Wrong in 2016 and What Happens Next”