NSDL files draft papers to float public issue; IDBI Bank, NSE, SBI to dilute holdings

The equity shares offered are proposed to be listed on Bombay Stock Exchange.

National Securities Depository Limited (NSDL), a SEBI- registered market infrastructure institution (MII) offering a wide range of products and services to the financial and securities markets in India, has filed its Draft Red Herring Prospectus with the Securities and Exchange Board of India (SEBI).

On December 5, 2022, Moneycontrol was the first to report that NSDL had kicked off its IPO plans which would be a pure OFS (offer for sale) with NSE and IDBI Bank planning to sell stake.

If the listing plans fructify, NSDL would become the second depository services company to be listed on the domestic bourses, post the bumper market debut of peer Central Depository Services Limited (CDSL) in 2017.

CDSL raised Rs 524 crore with the issue getting subscribed a whopping 170 times.

Following the introduction of the Depositories Act in 1996, NSDL pioneered the dematerialisation of securities in India in November 1996. As of March 31, 2023, the company is the largest depository in India in terms of number of issuers, number of active instruments, market share in demat value of settlement volume and value of assets held under custody, as per a CRISIL report.

The IPO will be a pure Offer for Sale of up to 57,260,001 equity shares.

The offer for sale of equity shares comprises up to 22,220,000 Equity Shares by IDBI Bank Limited; up to 18,000,001 Equity Shares by National Stock Exchange of India Limited; up to 5,625,000 Equity Shares by Union Bank of India; up to 4,000,000 Equity Shares by State Bank of India; up to 4,000,000 Equity Shares by HDFC Bank Limited (SS); up to 3,415,000 Equity Shares by Administrator of the Specified Undertaking of the Unit Trust of India (SUUTI).

The offer includes a reservation of equity shares for subscription by eligible employees (the employee reservation portion). The company and the selling shareholders, in consultation with the BRLMs, may offer a discount of the offer price to the eligible employees bidding in the employee reservation portion (employee discount), the offer less the employee reservation portion is hereinafter referred to as the 'net offer'.

The equity shares offered through the Red Herring Prospectus are proposed to be listed on BSE, as per the DRHP.

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 are the Book Running Lead Managers to the issue.

Can NSDL repeat the dream market debut of CDSL?

Established in 1996, NSDL, which is led by MD and CEO Padmaja Chunduru, provides a bouquet of services to investors, stockbrokers, custodians and issuer companies through its nationwide network of Depository Partners.

According to its DRHP, it is the largest depository in India in terms of number of issuers, number of active instruments, market share in demat value of settlement volume and value of assets held under custody, as of March 31, 2023.

"As on March 31, 2023, we had over 31.46 million active demat accounts held with 283 depository participants registered with us, and our accounts holders were located in more than 99 percent of pin codes in India and 186 countries across the world. As on March 31, 2023, we had an aggregate of 40,987 issuers registered with us. We witnessed a net increase of 3,509 issuers registered with us during Financial Year 2023. Furthermore, the average number of Demat Accounts opened with us per day in Financial Years 2021, 2022 and 2023 was 6,840, 15,528 and 15,139, respectively," the DRHP said.

It added further, "As on March 31, 2023, we serviced 99.99% of the value of equity, debt and other securities held by foreign portfolio investors in dematerialized form in India "

Apart from depository services, NSDL has launched other services as well. It started PAN card services and an online tax accounting system in 2004 and also launched online uploading of central excise challan data in 2005. In 2007, the firm started a facility for delivery of shares using mobile phones. In 2011, it was appointed as registrar of the Unique Identification System which led to the Aadhaar card. In 2015, the NSDL diversified into banking services and was awarded a licence by the RBI to open a payment bank along with 10 other players.