National Securities Depository (NSDL), India’s largest depository, has received approval from the Securities and Exchange Board of India (Sebi) for its initial public offering (IPO), more than a year after filing its offer document.
The market regulator issued final observations on September 30 on its draft red herring prospectus (DRHP), which was filed in July 2023.
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NSDL’s DRHP was kept in abeyance between August and December, which also led to a delay in obtaining the final approval.
NSDL’s maiden share sale will be entirely an offer for sale, with six shareholders—National Stock Exchange (NSE), IDBI Bank, HDFC Bank, Union Bank of India, SBI, and Government of India (SUUTI)—paring their holdings.
Shares of Central Depository Services (CDSL) rose 0.5 per cent to end at Rs 1,375, valuing the country’s only other depository at Rs 28,738 crore.
At present, NSE holds a 24 per cent share in NSDL, while IDBI is the largest shareholder with a 26 per cent stake.
NSDL’s IPO is key for meeting the regulatory mandate that caps ownership of a single entity in a market infrastructure institution at 15 per cent. The rules formulated in 2018 provided five years to entities to reduce holdings in excess of 15 per cent.
The five-year deadline ended on October 3, 2023. NSE had requested Sebi for an extension in the deadline as NSDL’s IPO was in limbo.
Sebi granted the extension in a letter dated October 6, 2023; however, it directed that the voting rights and all corporate actions in respect of excess shareholding held by NSE in NSDL above 15 per cent would remain frozen until the excess shareholding was divested.
BSE, too, last year in June, diluted its stake in its subsidiary CDSL through a bulk deal, selling nearly 5 per cent to comply with the norms.
Market participants said NSDL may have to update its financials in an addendum to the DRHP since a long time has passed during the approval process.
First Published: Oct 08 2024 | 5:23 PM IST
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