The National Stock Exchange of India just priced its IPO at a valuation multiple higher than Nasdaq. Nasdaq. The company that lists every dogsh*t tech startup that's ever burned through venture capital. Investors looked at that comparison and said yes, we'd like to pay more.
The $2.3 billion offering pulled in over $10 billion in bids. That's a 4x oversubscription. Retail traders saw a company trading at a higher multiple than the exchange where Tesla and Nvidia live and thought they'd discovered arbitrage. They hadn't. They'd discovered how to transfer wealth to people smarter than them.
Here's what's beautiful about this. The NSE makes money when other people trade. It's a casino that doesn't gamble. It just collects the rake. And investors are so desperate to get in on this action that they're bidding against each other to overpay for shares in a business model that literally profits from their own stupidity.
Some analyst somewhere is writing a note about India's growing retail investor base and expanding market penetration. He's using words like "structural tailwinds" and "demographic dividend." He's not mentioning that the exchange is selling shares to the same morons who will spend the next decade generating fee revenue by panic-selling midcap stocks at a loss.
The valuation makes sense if you squint. NSE processed 2 trillion trades last year or whatever the number is. Big volume. Lots of fees. But paying more than Nasdaq's multiple means you think Indian retail traders will generate more value per transaction than American ones. You're betting on the greater fool theory in a market where you're currently the fool.
The IPO closes this week. The shares will probably pop on the first day because that's what happens when you have $10 billion chasing $2.3 billion of supply. Then reality sets in. Then you own an expensive exchange stock. Then you check your portfolio in six months and wonder why you're underperforming an index fund.
Congrats on buying the house at the poker table for a 15% premium.
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