National Stock Exchange (NSE) IPO is coming soon, which will bring huge profits to early investors like SBI. SBI will sell shares worth ₹4,950 crore on its investment of ₹1.98 crore. Other government institutions will also get extraordinary benefits.
Mumbai : The long-pending IPO of the country’s largest stock exchange, National Stock Exchange (NSE), is now set to come soon. This IPO is no less than a jackpot for those government financial institutions who had invested in NSE in the initial days. They are going to get such returns on their investment which they might not have even imagined.
According to the Draft Red Herring Prospectus (DRHP) submitted by NSE, even if the price of one share in the IPO is considered to be Rs 2,000, then State Bank of India (SBI) will sell shares worth about Rs 4,950 crore. And the most interesting thing is that the total expenditure of SBI in purchasing these shares was only Rs 1.98 crore! The draft offers a rare glimpse of the immense wealth created by India’s largest stock exchange over the last three decades.
NSE became the hen that laid golden eggs for SBI!
Under the Offer for Sale (OFS), SBI is planning to sell 2.475 crore of its shares in the open market. Due to various share divisions, bonus shares and capital restructuring in the last 30 years, the average purchase price of these shares for SBI has come down to just 80 paise per share. Now if the price of one share in the IPO is fixed at Rs 2,000, then the total value of SBI’s stake will be Rs 4,950 crore. That means the bank will directly make a huge profit of Rs 4,948 crore.
Lottery of other government banks and institutions also started
This bumper benefit is not limited to SBI only. Many other government institutions which supported NSE in its beginning are also going to get more profits than expected.
Bank of Baroda (BoB): The purchase cost of one share for this bank was only 54 paise. The bank had invested a total of Rs 59 lakh, in exchange for which it will now sell shares worth Rs 2,197 crore.
Stock Holding Corporation of India Limited: This institution had purchased shares at the rate of only 46 paise per share. With its investment of around Rs 50 lakh, this company will now earn huge profit by selling shares worth Rs 2,178 crore.
Money will rain on insurance companies too
Big companies in the insurance sector like ‘The New India Assurance Company’ and ‘National Insurance Company’ had bought shares at an average price of only 32 paise per share. According to current estimates, the value of New India Assurance’s shares will be around Rs 2,100 crore, while National Insurance’s stake will be worth around Rs 1,200 crore.
United India Insurance Company, which had bought shares at a cost of 50 paise per share, will also sell shares worth about Rs 1,200 crore.
Investors who entered the market a little late and at a higher price are also going to make huge profits. For instance, General Insurance Corporation of India (GIC) had invested a total of Rs 5.6 crore at an average of Rs 5.26 per share. Now it will earn huge profits by selling shares worth more than Rs 2,131 crore.
Multibagger returns to foreign investors also
The purchase cost of foreign investors who invest in NSE in the later stages may be high, but at the IPO price of Rs 2,000, they are also sure to get ‘multibagger’ i.e. manifold returns.
MS Strategic (Mauritius) Limited: It has invested at an average of Rs 66.54 per share.
Aranda Investments (Mauritius) Private Limited: It has paid Rs 62.38 per share.
Canada Pension Plan Investment Board (CPPIB): Its purchase cost is the highest among investors selling shares, at Rs 324.13 per share.
When the IPO officially hits the market, its final price will be decided. But these details revealed in the draft clearly show how much wealth NSE has created along with the Indian capital market in the last three decades. For SBI and other early investors, this IPO is going to be recorded as one of the most successful long-term investment strategies in Indian financial history.