NSE IPO: Reasons Behind India’s Second Largest Initial Public Offering Not Achieving Full Subscription on Day One
The National Stock Exchange of India (NSE) launched its initial public offering (IPO) on Thursday, aiming to raise Rs 22,569 crore. On its first day, the IPO attracted bids for only 43% of the shares available. This offering is now the second-largest IPO in India, following Hyundai Motor India’s Rs 27,870-crore public offering in 2024.
Subscription Details
Investors submitted bids for 3.83 crore shares out of the 8.86 crore shares offered. Non-institutional investors subscribed to 72% of their allotted shares, while retail investors subscribed to 44%. Qualified Institutional Buyers (QIBs) showed the least interest, with only 19% of their reserved shares being subscribed.
Factors Behind the Lukewarm Response
Despite the NSE’s stature, the initial response to its IPO was muted. The subscription period is set to close on September 21, with the stock expected to list later in September. Analysts suggest that a crowded IPO market may have diluted interest. This week alone, five mainboard and six SME IPOs, totaling around Rs 24,500 crore, are vying for investor attention.
The NSE’s IPO accounts for over 90% of the total issue value this week. The combined value of IPOs launching between September 14 and 18 is the highest since October 2025. Other mainboard offerings, including Hero Motors and Jindal Supreme India, are also competing for investor funds.
Valuation Concerns
Valuation hesitancies may also be contributing to the lukewarm response. The NSE’s IPO comes at a time when the derivatives segment, which has been a major growth driver, is experiencing a slowdown. The exchange has set a price band of Rs 1,700 to Rs 1,785 per share, valuing it at approximately $46 billion. This valuation is 15% to 20% lower than earlier expectations and 40% below valuations from private-market transactions in 2024.
Investors are cautious due to recent regulatory changes that have impacted options trading, which constitutes 60% of the NSE’s trading revenue. Options volumes have decreased by 27% from their peak in 2024. The NSE’s decision to lower its IPO size and set a conservative price has raised questions about its listing strategy.
The IPO is structured as an offer for sale, meaning the NSE will not raise new capital. Instead, existing shareholders are selling portions of their holdings. This structure ties the offering size directly to shareholder participation, which has been lower than anticipated. The IPO size has been reduced from an initial plan of 14.9 crore shares, bringing the total issue value down from around Rs 30,000 crore.
A day before the IPO opened, the NSE secured Rs 6,746 crore from anchor investors, including Life Insurance Corporation of India (LIC), Goldman Sachs, and Fidelity. Sovereign wealth funds such as GIC Singapore and Abu Dhabi Investment Authority also participated. Despite the adjustments, the NSE’s IPO remains the second-largest in India, trailing only Hyundai Motor India’s record offering.
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