Major global asset managers and sovereign wealth funds are reportedly planning to invest in the anchor portion of the National Stock Exchange of India's (NSE) upcoming initial public offering (IPO). Among those expected to participate are Fidelity International Ltd, Prudential Plc, Singapore’s GIC Pte, Abu Dhabi-based Lunate Capital Ltd, Norway's Norges Bank Investment Management, Eastspring Investments (Prudential’s Asian asset management unit), and American investment giant BlackRock Inc. Their participation signifies strong institutional confidence and market validation for the IPO, potentially reassuring retail and domestic investors about the company's valuation and growth prospects.
The anchor portion of the IPO is estimated to be valued at approximately ₹6,800 crore, which is less than a third of the truncated IPO size. The overall IPO, comprising solely an offer for sale by existing investors, has been scaled down from an initial target of ₹30,000 crore to around ₹23,000 crore (approximately $2.7 billion), making it India's second-largest IPO after Hyundai Motor India Ltd.'s $3.3 billion share sale. The allocation of shares to these institutional buyers will be finalized in the days leading up to the public subscription opening on September 17.
Anchor books, under Indian capital market regulations, open before public share sales to allow institutional investors to secure allocations. Shares allotted through this mechanism are subject to post-listing lock-ins: 50% for 30 days and the remaining 50% for 90 days. The NSE has set a price band of ₹1,700-1,785 per share for its IPO. This valuation is lower than earlier expectations of ₹2,000-2,100 per share, valuing the exchange at around ₹4.42 lakh crore (approximately $53 billion), down from an initial target valuation of around $55 billion.
This scaled-down valuation, while lower than initially sought, is seen as potentially positive for new investors and has influenced existing shareholders, such as State Bank of India (SBI) and General Insurance Corporation of India (GIC), to reduce the number of shares they are selling. For example, SBI reduced its stake sale from 1% to about 0.7%, expecting up to ₹2,851 crore. Similarly, GIC reduced its stake sale by 18 basis points, potentially earning up to ₹1,104 crore. This decision allows existing shareholders to retain a larger portion of their investment, anticipating future growth and better returns given NSE's dominant position in India's financial markets, holding around 93% of the cash market, 99.79% of equity futures, and 74.71% of equity options.
