Central Depository Services files draft papers for IPO

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Mumbai: Central Depository Services (India) Ltd (CDSL) on Tuesday filed its draft initial public offering (IPO) prospectus with the markets regulator Securities and Exchange Board of India (Sebi).

According to the draft red herring prospectus (DRHP), the IPO will be a pure offer for sale by existing shareholders of CDSL—BSE Ltd, State Bank of India Ltd, Bank of Baroda Ltd and The Calcutta Stock Exchange.

Mint reported in August that CDSL was planning to go public to help existing shareholders sell their stakes.

The existing shareholders will sell a total of 35.16 million shares, the DRHP shows.

BSE, SBI, Bank of Baroda and The Calcutta Stock Exchange together hold 65.65% stake in CDSL, with BSE alone holding 50%.

Post the IPO, the joint shareholding of these four entities will come down to 32%, according to the DRHP. BSE will be divesting the largest portion of shares, with the exchange looking to sell almost 26% stake of CDSL.

The company has appointed Axis Capital Ltd, Edelweiss Financial Services Ltd, Nomura Financial Advisory and Securities (India) Pvt. Ltd, SBI Capital Markets Ltd, Haitong Securities India Pvt Ltd, IDB Capital and Yes Securities (India) Ltd to manage the IPO.

CDSL was set up in 1999 by BSE along with banks such as State Bank of India (SBI), Bank of India, Bank of Baroda, HDFC Bank Ltd, Standard Chartered Bank and Union Bank of India.

A depository, CDSL facilitates holding of securities in electronic form. CDSL and National Stock Exchange-promoted National Securities Depository Ltd are the only two depositories in the country.

BSE’s plan to divest its stake in CDSL comes at a time when the exchange is planning an IPO of its own to provide an exit route to its investors. On 30 June, Mint reported that BSE had cleared the final hurdle to going public after its shareholders approved a proposal for the IPO.

BSE had informed shareholders on 28 May that it would sell as much as 30% stake before 31 March 2017 through an OFS, with a possible fresh sale of equity tagged on. On 31 May, Mint reported that BSE was seeking a valuation of Rs400 per share, which would value the exchange at Rs4,367 crore.

The CDSL IPO will create liquidity for other shareholders, especially state-owned banks which are invested in the company. With rising bad assets and large sums of money needed for recapitalization, these banks have been pushed by the finance ministry to look at divestment of non-core assets to raise funds.