Merchant bankers are gearing up for a ‘beauty parade’ in anticipation of NSE’s IPO

Merchant Bankers preparing for ‘beauty parade’ in anticipation of NSE IPO, say sources

Merchant bankers have started seeking meetings with the top management of National Stock Exchange (NSE) in anticipation of its public issue in an effort to build relationships, industry sources have told Moneycontrol requesting anonymity, even though the formal process will commence only once the exchange gets a No Objection Certificate (NOC) from Sebi’s market regulation department.

One banking source told Moneycontrol, “The internal preparations for a ‘beauty parade’ have started,” referring in industry parlance to the pitch to be selected as a merchant banker to the issue. The process involves merchant bankers making presentation to the company about likely valuations and features of the company and public issue that need to be highlighted to the investors, along with global perspective on similar public offerings.

“The big shot merchant bankers who rarely step out for meetings, unless it is with some big corporate are seen at listings at Exchange Plaza for even an average issue,” another source said, adding, “it gives an excuse to seek meetings with top people at NSE.”

The rush for relationship meetings at NSE is understandable, given the prominence of the issue. All merchant bankers want to be associated with the IPO, as this will be a major event for the capital market, said one market participant.

Most merchant bankers or their group-level entities are also associated with the exchange as member brokers who bring in business, and hence may be accommodated in the public issue. Industry insiders also said that for bigger issuers, all merchant bankers are keen to lend their name.

NSE has not replied to the Moneycontrol’s email seeking comment on the story.

The exchange had filed for settlement application with Sebi on June 20, which is now under process. Sebi’s internal committee is examining the application and after reaching a conclusion, it will be presented to the High-Powered Advisory Committee (HPAC) for a settlement. The advisors will then take a view and make their recommendation to a panel of Sebi’s whole-time members. NSE has offered to pay around Rs 1,400 crore as a settlement amount for co-location and dark fibre cases.

In the co-location case, it was alleged that some brokers exploited NSE’s facility by physically placing their servers closer to the exchange for faster data access, thus gaining unfair edge over others. Sebi has also alleged that NSE provided preferential access to certain brokers through the use of dark fibre for faster connectivity to co-location facilities.

As per sources, a second meeting of HPAC is expected towards the end of the month. If the internal committee of Sebi is ready with its recommendation, then the matter can be presented before the HPAC to seek its view.

NSE is likely to initiate the formal process for IPO immediately after the case is withdrawn and NOC is issued. Thereafter, 4-5 months may be required to prepare the draft red herring prospectus (DRHP), as every quarterly number will have to be audited. Then, another 2-3 months may be required for routine queries to merchant bankers from Sebi. Given this timeline, the IPO may see the light of the day in the last quarter of the fiscal, if everything goes smooth.

While NSE had won the case in Securities Appellate Tribunal (SAT) against the regulator, Sebi had challenged the order in the Supreme Court, a decision on which is pending.

As per sources, NSE had deposited Rs 1,100 crore with Sebi, out of which Rs 300 crore was returned following a directive by the Supreme Court in 2023. Thus, around Rs 800 crore, with interest earned along with principal deposit is with Sebi, and additional Rs 600 crore may need to be paid by Sebi to make the total payout Rs 1,400 crore.