NSE's valuation jumps 60% to $58 billion ahead of IPO

A potential IPO would place NSE’s $58 billion valuation above that of Nasdaq Inc. and would narrow the gap with Deutsche Boerse AG’s $62 billion market value

Growing hopes for a listing of the world’s biggest equity-derivatives bourse have pushed the valuation of the National Stock Exchange of India Ltd. to $58 billion in private markets, according to people involved in recent transactions.

Wealthy investors and institutions anticipating an initial public offering as early this year have been buying the unlisted shares aggressively, two of the people said, asking not to be identified as the deals are private. With demand far outstripping supply, the stock has changed hands for as much as Rs 2,000 ($23) recently. Its valuation had already doubled in just four months to as much as $36 billion in September.

The rally coincides with efforts by the exchange to settle a longstanding legal dispute with India’s securities regulator that has held up its listing plans for nearly a decade. A potential IPO would place NSE’s $58 billion valuation above that of Nasdaq Inc. and would narrow the gap with Deutsche Boerse AG’s $62 billion market value, data compiled by Bloomberg show.

The NSE has almost 2.5 billion shares outstanding in private markets. Some 64% of that is held by public investors — including local and foreign institutions — and wealthy individuals, according to its website. An email to the exchange’s representative went unanswered.

The robust demand for shares of the exchange has strained the already limited stock supply. At least three market intermediaries had to return the money to prospective investors after failing to deliver shares because some sellers backed out ahead of the expected IPO, according to two people familiar with the matter.

Meanwhile, the bourse has become more aggressive in equity derivatives. After consistently losing market share to listed peer BSE Ltd., NSE’s Chief Executive Officer Ashish Kumar Chauhan recently told analysts and investors that the decline has “run its course.” To win back ground over BSE, NSE plans to apply to change the expiration day of its derivatives contracts to Tuesday from Thursday.

The NSE, backed by large investors like Life Insurance Corp. of India and Canada Pension Plan Investment Board, first filed papers for an IPO in 2016. The regulator’s investigation into allegations that some high-speed traders gained unfair access to its co-location servers not only derailed the listing, but also led to a six-month ban from capital markets.