Mumbai, June 18 (IANS) The proposed initial public offering (IPO) of the National Stock Exchange (NSE) is expected to unlock massive gains for several state-owned financial institutions, including State Bank of India (SBI), while also highlighting the embedded value of holdings owned by Life Insurance Corporation of India (LIC), according to reports.

According to the NSE’s draft red herring prospectus (DRHP), SBI plans to divest 2.475 crore shares through the offer for sale.

At an assumed IPO price of about Rs 2,000 per share, the stake sale would be worth nearly Rs 5,000 crore, the reports said.

The disclosures show that SBI acquired its shares at a weighted average cost of just Rs 0.80 per share.

In addition, several other public sector institutions that backed NSE in its early years are also poised to reap substantial gains.

Shares of Life Insurance Corporation of India (LIC) may attract attention as the insurer remains NSE’s largest shareholder with a 10.72 per cent stake, despite not being among the selling shareholders in the proposed IPO.

Bank of Baroda, with a weighted average acquisition cost of Rs 0.54 per share, would sell shares worth about Rs 2,197 crore at the assumed IPO price.

Meanwhile, Stock Holding Corporation of India Ltd. is expected to monetise holdings worth around Rs 2,178 crore, despite acquiring its shares at a weighted average cost of Rs 0.46 apiece.

Among insurers, The New India Assurance Company and National Insurance Company acquired their shares at a weighted average cost of Rs 0.32 each.

At the assumed IPO price, the shares being offered by New India Assurance would be worth around Rs 2,100 crore, while National Insurance Company’s stake would fetch nearly Rs 1,200 crore.

United India Insurance Company, whose acquisition cost stood at Rs 0.50 per share, is also set to sell shares worth about Rs 1,200 crore.

General Insurance Corporation of India, with a weighted average acquisition cost of Rs 5.26 per share, would monetise shares worth more than Rs 2,131 crore.

However, the final valuation will be determined closer to the issue launch.

NSE on Wednesday filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) and the BSE for its much-awaited IPO. The proposed listing will see NSE’s shares traded on the BSE.

–IANS

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