NSE IPOs to Deliver Massive Gains for SBI
The National Stock Exchange of India (NSE) is set to make several long-standing shareholders extraordinarily wealthy with a maiden public offering that could deliver gains of over 5,57,800 percent for some investors.
Stake Sale Details
The offering is an offer-for-sale (OFS) where existing shareholders will monetize their stakes at a steep premium to their original acquisition cost. The total stake sale involves up to 12,64,36,650 equity shares, raising approximately Rs 22,568 crore at the upper price band of Rs 1,785 per share. According to the red herring prospectus, 23 investors—comprising 20 corporate entities and three individuals—are participating in the sale. These shareholders will amass a total of Rs 22,568 crore from NSE’s maiden stake sale at the upper end of its price band of Rs 1,700-1,785.
The exchange will list exclusively on the BSE Ltd on September 24, following a subscription window that runs from September 17 to September 21. Market chatter suggests a grey market premium of Rs 200-205 apiece, hinting at potential listing gains of 11-12 percent for bidders. Least heard, NSE was commanding a grey market premium of Rs 200-205 apiece, suggesting a listing gains of 11-12 per cent for the investors.
Who Stands to Gain
Several large institutional investors are offloading significant portions of their holdings. The New India Assurance Company Ltd (NIACL), Oriental Insurance Company, and National Insurance Company are reported to be the biggest gainers among these state-owned entities. They collectively hold a weighted average cost of acquisition of just Rs 0.32 per share, having cumulatively offloaded 1,32,76,290 equity shares to bag Rs 2,370 crore. These three companies are reported to be biggest gainers, with a weighted average cost of acquisition (WACA) of Rs 0.32 per share.
Other key players in the transaction include SBI Capital Markets, Stock Holding Corporation of India, United India Insurance Company, and Bank of Baroda. These entities are selling shares acquired at costs ranging from Rs 0.38 to Rs 0.80 apiece, which translates to returns of 2,230 to 4,700 times their initial investment. Other selling investors like SBI Capital Markets (WACA of Rs 0.38 apiece), Stock Holding Corporation of India (WACA of Rs 0.46 apiece), United India Insurance Company (WACA of Rs 0.50 apiece), Bank of Baroda (WACA of Rs 0.54 apiece) and State Bank of India (WACA of Rs 0.80 apiece) will make 2,230-4,700 times returns from NSE IPO.
While the state-owned insurers and brokers stand to reap massive multi-bagger returns, private institutional investors like Be-In Eight SRL, Mahogany, the Canada Pension Plan Investment Board, Crown Capital, 2726247 Ontario Inc and ICICI Lombard General Insurance Company are expected to see more modest gains of 73 percent to 215 percent.
However, institutional investors like Be-In Eight SRL, Mahogany, Canada Pension Plan Investment Board, Crown Capital, 2726247 Ontario Inc and ICICI Lombard General Insurance Company will make 73 per cent to 215 per cent returns from their OFS. Interestingly, an individual selling shareholder named Mahesh Gupta appears set to lose money, as his weighted average cost of acquisition is 1,826.85 apiece. However, an individual selling shareholder named Mahesh Gupta will sell up to 500 equity shares but make a loss as his WACA is 1,826.85 apiece.
