NSE IPO: Can you buy shares now to participate in OFS? All about the Rs 20,000 crore opportunity

India’s largest stock exchange has moved into the execution phase of its IPO, with the offer-for-sale (OFS) process now underway. The bourse has recently contacted shareholders to gauge their interest in participating in the public offer, which could exceed Rs 20,000 crore. This explainer breaks down how the OFS works and what it means for investors.

What exactly is happening?

The NSE IPO is expected to be entirely an offer-for-sale, meaning existing shareholders will sell a portion of their holdings to the public. The exchange itself is not issuing fresh shares or raising primary capital. The current step involves identifying eligible shareholders who can tender their shares in the IPO. This is being done through a formal outreach asking investors to indicate their willingness to participate.

Who is eligible to participate in the OFS?

Only those shareholders who have held NSE shares continuously since June 15, 2025, will be eligible to offer shares in the IPO. This aligns with Sebi regulations requiring a minimum one-year holding period before filing the draft red herring prospectus.

Investors who acquired shares after this date will not be eligible to participate in the OFS, even if they currently hold NSE shares. There is also a process requirement: eligible shareholders must submit an expression of interest by April 27, 2026, if they want to participate.

Can you buy NSE unlisted shares now to participate?

From a practical standpoint, no. Buying NSE shares in the unlisted market now will not make an investor eligible for the OFS because the one-year holding condition will not be met. This effectively closes the window for new investors who were hoping to enter purely for IPO participation.

The OFS is not open to all shareholders at the time of listing, but only to those who meet the regulatory holding criteria.

What happens if you are eligible?

Eligible investors can choose to sell fully or partially in the IPO through the OFS route. The final price will be determined through a book-building process, similar to other IPOs. This means the exact exit price is not fixed at the time of submitting interest and will depend on investor demand during the offering.

If the shares offered by investors are not fully subscribed, any unsold portion will be subject to a six-month lock-in after listing. This creates an additional risk, as investors may not be able to exit immediately.

Why is NSE doing this via OFS?

Under regulatory norms, IPOs can include an offer-for-sale component that allows existing investors to exit. In NSE’s case, the IPO is expected to be largely, if not entirely, secondary in nature. The exchange is likely to offload around 4% to 4.5% of its equity through this process.

This also explains the current exercise. With a large and fragmented shareholder base, the exchange needs to first identify who is willing to sell before finalising the structure of the offering.

Why has the shareholder base become so large?

The number of NSE shareholders has surged over the past year, driven by strong activity in the unlisted market. The shareholder count jumped from about 39,000 in early 2025 to over 1.8 lakh by the end of the year. This sharp increase reflects growing investor interest in pre-IPO opportunities, but it also makes the OFS process more complex.

What are the key risks for investors?

For eligible shareholders, the biggest uncertainty is pricing. Since the IPO price is discovered through book building, investors do not have clarity on the final exit value at the time of opting into the OFS.

There is also execution risk. If demand is weak and shares remain unsold, investors could be locked in for six months post-listing, exposing them to market volatility.

For new investors considering unlisted shares, the primary risk is expectation mismatch. Buying now does not guarantee participation in the IPO. Returns will depend entirely on post-listing performance, which can be volatile.

There is also valuation risk. Unlisted market prices often factor in IPO expectations. If the final listing valuation does not justify these premiums, downside risk remains.

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