Shares of New India Assurance Company Ltd. (NIACL) surged as much as 6.6% on Monday, extending their five-day gain to 31%, after the National Stock Exchange filed draft papers for its long-awaited initial public offering. Investors are betting that the proposed IPO could unlock significant value for several institutional shareholders, including state-owned insurers that acquired their stakes in the exchange decades ago at nominal prices.
According to the draft red herring prospectus (DRHP), New India Assurance plans to sell up to 1.05 crore NSE shares through the offer for sale. The weighted average acquisition cost of these shares is just Rs 0.32 apiece, underscoring the substantial appreciation in value over the years.
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The NSE's proposed IPO, estimated at nearly Rs 30,000 crore, could become the largest public issue in Indian market history. The issue consists entirely of an offer for sale of 14.89 crore shares, representing nearly 6% of the exchange's equity capital.
Other state-owned insurers are also set to benefit. General Insurance Corporation of India (GIC Re) will sell up to 1.06 crore shares acquired at an average cost of Rs 5.26 per share. National Insurance, United India Insurance and Oriental Insurance also hold NSE shares purchased at less than Re 1 per share.
Among the largest selling shareholders, State Bank of India plans to offload up to 2.48 crore shares, while MS Strategic (Mauritius) will sell up to 1.60 crore shares.
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