NSDL's much-awaited IPO likely before April to meet Sebi ownership cap

Sebi granted in-principle approval for the IPO in September 2023, following NSDL's draft red herring prospectus (DRHP) filing in July 2023

The National Securities Depository (NSDL), India’s largest depository, is gearing up to launch its initial public offering (IPO) by early April, according to sources familiar with the matter.

 

The move is crucial for complying with the Securities and Exchange Board of India’s (Sebi) mandate capping single-entity ownership in market infrastructure institutions at 15 per cent.

 

Sebi granted in-principle approval for the IPO in September 2024, following NSDL’s draft red herring prospectus (DRHP) filing in July 2023.

 

The IPO approval is valid until September, the regulatory dispensation given to adhere to ownership guidelines is set to lapse in April, prompting NSDL to expedite the process.

 

“We are planning to squeeze in the IPO within the next month to meet the deadline,” said a company official.

 

The IPO will be entirely an offer for sale (OFS), with six shareholders diluting their stakes, including the National Stock Exchange (NSE), IDBI Bank, and HDFC Bank.

 

In 2018, Sebi introduced rules limiting single-entity ownership in market infrastructure institutions to 15 per cent, with a five-year compliance window ending in October 2023.

 

NSE, which holds 24 per cent in NSDL, sought an extension from Sebi, leading to a temporary suspension of the rule between August and December 2023. This delay also impacted NSDL’s final IPO approval.

 

The IPO is a critical step for NSDL to align with Sebi’s ownership norms, ensuring a diversified shareholder base and reducing concentration risk. It also marks a significant milestone for India’s capital markets, as NSDL is a key player in the depository ecosystem, facilitating electronic holding and trading of securities.

 

Queries sent to NSDL remained unanswered at the time of publishing.