NSDL Initiated Talks With Investment Banks For ₹4,500 Cr IPO

According to two persons familiar with the matter, National Securities Depository Ltd (NSDL), India’s first and largest depository services provider, has begun talks with investment banks for a ₹4500 crore initial public offering.

After the Depositories Act was passed in 1996, NSDL was established. It has over 27.6 million investor accounts at the end of May, with a demat custody value of ₹297.55 trillion. In terms of demat assets worth, the depository has a market share of more than 89%.

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Central Depository Services (India) Ltd (CDSL), India’s sole other depository, went public in 2017, generating ₹524 million in an IPO that was oversubscribed 170 times. The CDSL was founded in 1999.

“NSDL has begun discussions about its anticipated initial public offering. Most of the largest local and international investment banks are fighting for the IPO mandate, which may be settled in the coming weeks. The IPO will mostly be a secondary share sale to current investors, albeit a minor amount of money may be raised as part of it. On condition of anonymity, one of the two sources described above claimed that most shareholders of the firm, including numerous public sector bank shareholders and other investors in the company, are likely to sell part of their holdings through the IPO.

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IDBI Bank and the National Stock Exchange (NSE) are the largest owners in NSDL, with 26% and 24% holdings, respectively. State Bank of India, Union Bank of India, and Canara Bank each possess 5%, 2.81%, and 2.30%, respectively, while the federal government owns 6.83% through the Specified Undertaking of the Unit Trust of India (SUUTI). HDFC Bank, Citibank, HSBC, Standard Chartered Bank, Deutsche Bank, Kotak Mahindra Life Insurance Co. Ltd, and IIFL Special Opportunities Fund are among the other NSDL owners.

The IPO is expected to be valued at least Rs 4,500 crore at a valuation of Rs 16,000-17,000 crore, according to the second source, who spoke on the condition of anonymity.

NSDL has yet to respond to an email addressed to them as of press time.

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NSDL recorded consolidated revenue of ₹821.29 crore for the fiscal year ended March 31, 2022, up 56% from the previous year’s ₹524.30 crore. In FY22, the firm had a profit of ₹212.32 crore, up from ₹188.55 crore in the previous fiscal year.

In FY22, NSDL’s depository services business generated 369.26 crore in income, followed by its banking services business with 299.24 crore and database management services with 92.60 crore.

The ambitions to go public by NSDL come at a time when demat account openings have skyrocketed as a result of the stock market’s post-covid boom. After a strong increase to 14.2 million new demat accounts in FY21, openings increased to 34.7 million in FY22. At the end of May 2022, the country’s total number of demat accounts was 94.77 million. To be sure, due to the drop in stock prices and volatility caused by global financial issues, demat account openings are projected to decelerate this year.