CDSL to launch Rs 524-cr IPO on June 19

Promoter BSE to offer 26% stake to comply with Sebi requirements

Central Depository Services India (CDSL) will launch its much-awaited initial public offering (IPO) on June 19. Promoter BSE will sell 26 per cent stake in the depository via the IPO to comply with the shareholding requirement imposed by markets regulator Securities and Exchange Board of India (Sebi).

The exchange currently holds 50.05 per cent stake in CDSL. To meet Sebi norms, it had to bring down its holding to 24 per cent by March 31, 2017. Sebi, however, has extended the deadline till June 30. CDSL’s Rs 524-crore IPO will close on June 21 and the listing will take place before June 30.

The IPO entirely comprises of secondary share sale of 35.2 million shares which are being offered in the price band of Rs 145-149 per share. Besides the BSE, State Bank of India, Bank of Baroda and Calcutta Stock Exchange will be offering their 4.57 per cent, 2.08 per cent and 0.96 per cent stake, respectively, in the IPO.

The offering will comprise of 33.65 per cent of paid-up equity share capital of CDSL. At the top-end of the price band, CDSL will be valued at around Rs 1,550 crore. After BSE, CDSL is the second market infrastructure institution (MII) to go public. Just like the BSE, CDSL, too, will be listed only on the National Stock Exchange (NSE).

For the year FY17, CDSL had reported net profit of Rs 85.8 crore on revenues of Rs 1,86.9 crore.

Set up in 1999, CDSL is among the only two depositories in the country along with the National Securities Depository (NSDL). Both CDSL and NSDL facilitate holding of securities in electronic (dematerialised) format. As of March 2017, CDSL managed 12.3 million demat accounts, while NDSL handled 15.6 million. CDSL charges annual issuer fees for holding of securities in electronic form. Besides, it also generates revenues from other services such as electronic voting, documents storage, processing of know your customer (KYC) applications, processing fees for corporate actions like dividend payout and buybacks. Analysts say CDSL is a play on the increase in penetration of the financial markets in the country. Savings in financial assets has grown at 10 per cent compounded annual growth rate (CAGR) between FY09 and FY16. The growth is expected to accelerate further as financial awareness and the working class population increases.