NSE may get more breathing space for disinvesting 37% stake in CAMS

Last month, Sebi had directed the bourse to divest its entire stake in the registrar and transfer agent (RTA) within a year

The National Stock Exchange (NSE) could get more breathing space for disinvesting its 37 per cent stake in Computer Age Management Services (CAMS). Last month, the Securities and Exchange Board of India (Sebi) had directed the bourse to divest its entire stake in the registrar and transfer agent (RTA) within a year.
 
The diktat had put the exchange in a spot, given that CAMS had filed for an initial public offering (IPO) only last month. Through the IPO, the NSE was looking to offload 12.5 per cent stake.
 
While the stake sale will help the NSE divest a third of its stake, the remaining 24.5 per cent holding will get locked in for a year.
 
Under Sebi guidelines, the pre-IPO shareholding cannot be sold for a period of one year from listing. It would have meant that the NSE would have missed Sebi’s directive to sell its entire stake by February 2021.
 
People in the know said investment bankers handling the IPO raised this issue with Sebi, following which the regulator has decided to consider some relaxation.

“We have asked the exchange to submit the roadmap for disinvestment. We are aware that the IPO could create issues for further stake divestment. We will take a reasonable call based on what the NSE proposes,” said a senior Sebi official.
 
People in the know said one of the proposals being discussed is changing the IPO structure. Under the current proposal, the NSE and four other investors are divesting a total of 25 per cent stake through the IPO.
 
“If the NSE has to divest its entire stake in the IPO, it will require major changes to the current proposal. Some investors may have to cancel their disinvestment plan, otherwise it could lead to a huge dilution,” said an investment banker.
 
In the IPO, Warburg Pincus (through affiliate Great Terraini) is divesting 8.5 per cent stake, while Acsys Investments and HDFC group will offload 2 per cent each.
 
The banker said that a more feasible solution would be to let the IPO proceed according to plan, and take an undertaking from the NSE that it will divest the remaining stake after the lock-in period ends.
 
The regulator is yet to approve the CAMS offer document, which was submitted on January 9. The processing status on Sebi’s website says “clarification awaited” from investment banker.
 
In a letter dated February 4, Sebi had observed that the NSE had failed to obtain prior permission for acquisition of a stake in CAMS during FY14.
 
CAMS is India’s leading RTA. Karvy Computershare and Link Intime are the other major players that operate in the RTA space, which has seen significant interests for PE investors as well as global financial institutions over the last few years.