CDSL set to file IPO documents this month

To be entirely a secondary sale; BSE and HDFC Bank to divest in the issue

Central Depository Services (CDSL) will file the needed documents this month for an Initial Public Offer (IPO) of equity.

It will the second market infrastructure institution (MII) after BSE Ltd to file for an IPO this year. Set up by in 1999 by the BSE exchange, CDSL facilitates holding of securities in electronic form, one of only two depositories in the country. The other is the National Stock Exchange-promoted NSDL, market leader in the segment.

CDSL's public issue will be entirely an offer for sale, with BSE diluting a large chunk of its holding, to comply with regulatory norms. HDFC Bank and some state-owned banks will also pare their holdings in the MII through the offering, said three people with knowledge of the development.

CDSL is eyeing a valuation between Rs 1,200 and Rs 1,500 crore, sources said.

BSE currently owns 50 per cent stake in CDSL and will dilute around 26 per cent in the IPO. The bourse, through a postal ballot, had sought approval of its shareholders for the dilution in the depository. Earlier this year, BSE had sold around four per cent stake in CDSL to Life Insurance Corporation; the depository was said to be valued at Rs 850-900 crore.

According to the Securities and Exchange Board of India's (Sebi's) regulations, no stock exchange can own more than 24 per cent stake in a MII. The deadline for BSE to bring down its holding in CDSL ends on March 31, 2017. Sources said CDSL is aiming to launch its IPO before the deadline.

"We propose to dilute our remaining stake in CDSL to the required level with the IPO, through an offer for sale. We expect that after reducing our stake in CDSL, we will no longer exercise control over CDSL," BSE has said in its offer document, filed with Sebi.

As on November 2016, CDSL had a little more than 16 million demat accounts, with a holding value of nearly Rs 16 lakh crore, data from its website showed. For the financial year ending March 2015, it had a net profit of Rs 43 crore on revenue of Rs 105 crore.

 

Top 10 shareholders in CDSL