NSDL gets Sebi nod for IPO over a year after filing offer document

At present, NSE holds a 24 per cent share in NSDL, while IDBI is the largest shareholder with a 26 per cent stake

The Securities and Exchange Board of India (Sebi) has given a go-ahead for National Securities Depository’s (NSDL) initial public offering (IPO) more than a year after it filed the offer document.

The market regulator issued final observations on September 30 on its draft red herring prospectus (DRHP), which was filed in July, 2023.

NSDL’s DRHP was kept in abeyance between August and December last year, 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.

At present, NSE holds 24 per cent share in NSDL, while IDBI is the largest shareholder with 26 per cent stake.

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.

 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 the holdings in excess of 15 per cent.

The five-year deadline had ended on October 3, 2023. NSE had requested Sebi for an extension in the deadline as NSDL’s IPO was in limbo.

Sebi had granted the extension in a letter dated October 6, 2023. However, it had directed that the voting rights and all corporate actions in respect to excess shareholding held by NSE in NSDL above 15 per cent will remain frozen till the excess shareholding was divested.

BSE too in June last year 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 in the approval process.