NSE IPO optimism lifts IFCI shares by 11%. What's the connection?

The shares of IFCI rallied more than 11% on Friday after the National Stock Exchange announced that it has appointed 20 merchant bankers and eight law firms for its much-awaited initial public offering (IPO).

IFCI is a government-owned financial institution that provides financial assistance to corporations across sectors. The company holds a majority stake of 52.86% in Stock Holding Corporation of India, which in turn holds 4.4% stake in NSE.

In the unlisted market, NSE is currently valued at around Rs 5 lakh crore. Based on this valuation, Stock Holding Corporation’s total stake in NSE is worth more than Rs 22,000 crore.

Thereby, IFCI has an indirect exposure to NSE. Its subsidiary Stock Holding Corporation of India can be one of the selling shareholders in the offer-for-sale (OFS) which constitutes the stock exchange's proposed maiden public issue.

Currently, Life Insurance Corporation of India (LIC) remains the single-largest shareholder in NSE with a 10.72% stake. Other key shareholders include Aranda Investments Mauritius (4.54%), Stock Holding Corporation of India (4.44%), SBI Capital Markets (4.33%) and Veracity Investments (3.93%).

In a press release, NSE announced that it has selected 20 merchant bankers for its IPO, including JM Financial, Axis Capital, IIFL Capital Services, Motilal Oswal Investment Advisors, ICICI Securities, SBI Capital Markets, Nuvama Wealth Management, HDFC Bank, Avendus Capital Private, Morgan Stanley India Company, Citigroup Global Markets India, J.P. Morgan India, HSBC Securities and Capital Markets (India), IDBI Capital Markets & Securities, 360 ONE WAM, Anand Rathi Advisors, DAM Capital Advisors, Pantomath Capital Advisors, and Equirus Capital.

The eight law firms selected for the IPO include Cyril Amarchand Mangaldas, Khaitan & Co, Latham & Watkins LLP, Sidley Austin Singapore Pte. Ltd., AZB & Partners, S&R Associates, Shardul Amarchand Mangaldas & Co, and Trilegal.

Based on prevailing prices in the grey market, the IPO could potentially raise about Rs 23,000 crore.

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