NSDL's Upcoming IPO: IDBI Bank, NSE, and SBI to Divest Stake in Landmark Offering

Rajesh
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National Securities Depository Limited (NSDL), a leading market infrastructure institution in India, has taken a significant step towards its initial public offering (IPO). As a registered entity with the Securities and Exchange Board of India (SEBI), NSDL offers a diverse range of financial and securities market products and services.

NSDL UP Coming IPO

The news of NSDL's IPO plans first surfaced on December 5, 2022, when Trading Talk reported that NSDL intended to proceed with a pure offer for sale (OFS), with both NSE and IDBI Bank planning to sell their stake in the company.

Should NSDL's listing plans come to fruition, it would become the second depository services firm to be listed on the Indian stock exchanges. The first was Central Depository Services Limited (CDSL), which made a highly successful market debut in 2017. CDSL raised an impressive amount of Rs 524 crore, with the issue being oversubscribed by a staggering 170 times.

NSDL has been at the forefront of transforming the Indian securities market since it pioneered the dematerialization of securities in November 1996, following the introduction of the Depositories Act. According to a CRISIL report, as of March 31, 2023, NSDL stands as the largest depository in India in terms of the number of issuers, active instruments, market share in demat value of settlement volume, and the value of assets held under custody.

The proposed IPO of NSDL will consist of a pure offer for sale of up to 57,260,001 equity shares. The offer for sale will comprise various entities, including IDBI Bank Limited, National Stock Exchange of India Limited, Union Bank of India, State Bank of India, HDFC Bank Limited (SS), and the Administrator of the Specified Undertaking of the Unit Trust of India (SUUTI).

The IPO also includes a reservation of equity shares for eligible employees. The company, in consultation with the Book Running Lead Managers (BRLMs), may offer a discount on the offer price to eligible employees participating in the employee reservation portion. The remaining portion of the offer, excluding the employee reservation, is referred to as the 'net offer.'

The equity shares being offered through the Red Herring Prospectus are expected to be listed on the Bombay Stock Exchange (BSE), as stated in the DRHP (Draft Red Herring Prospectus).

The Book Running Lead Managers for the issue are ICICI Securities Limited, Axis Capital Limited, HSBC Securities and Capital Markets (India) Private Limited, IDBI Capital Markets & Securities Limited, Motilal Oswal Investment Advisors Limited, and SBI Capital Markets Limited.

Can NSDL replicate the successful market debut of CDSL? Established in 1996 and headed by MD and CEO Padmaja Chunduru, NSDL offers a comprehensive range of services to investors, stockbrokers, custodians, and issuer companies through its extensive network of Depository Partners across India.

As per the DRHP, as of March 31, 2023, NSDL holds the distinction of being the largest depository in India in terms of the number of issuers, active instruments, market share in demat value of settlement volume, and the value of assets held under custody.

According to the DRHP, NSDL had over 31.46 million active demat accounts registered with 283 depository participants as of March 31, 2023. These account holders were spread across more than 99 percent of pin codes in India and 186 countries worldwide. NSDL also had 40,987 issuers registered with them as of the same date, with a net increase of 3,509 issuers during the financial year 2023. Additionally, the average number of demat accounts opened with NSDL per day in the financial years 2021, 2022, and 2023 was 6,840, 15,528, and 15,139, respectively.

The DRHP further stated that NSDL services 99.99% of the value of equity, debt, and other securities held by foreign portfolio investors in dematerialized form in India.

Apart from its core depository services, NSDL has ventured into other areas as well. It initiated PAN card services and an online tax accounting system in 2004, followed by the introduction of online uploading of central excise challan data in 2005. In 2007, NSDL introduced a facility for share delivery using mobile phones. NSDL's pivotal role in the registration of the Unique Identification System, which resulted in the Aadhaar card, began in 2011. In 2015, NSDL diversified its offerings by venturing into banking services and was granted a license by the Reserve Bank of India (RBI) to establish a payment bank, alongside ten other entities.

NSDL's IPO plans mark a significant milestone in the company's journey and hold the potential to replicate the impressive market debut witnessed by its peer, CDSL. With its strong market presence and a wide range of services catering to the evolving needs of investors, NSDL is poised to make an impact in the Indian securities market.

Disclaimer: The information in this article is for general informational purposes only and should not be considered as financial or investment advice. We do not guarantee the accuracy, completeness, or reliability of the information. Any reliance you place on this information is strictly at your own risk. Always seek professional advice before making any financial decisions.

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