Central Depository Services Ltd (CDSL), part-owned by stock exchange operator BSE Ltd, is seeking a valuation of as much as Rs 1,557 crore ($241.40 million) through an initial public offering.
The Mumbai-based securities depository firm has fixed the price band for its IPO at Rs 145-149 a share, it said on Monday. This would help the selling shareholders raise Rs 524 crore at the upper end of the price band.
The IPO, the first by a securities depository firm in India, will open on 19 June and close two days later. The anchor book, in which institutional investors accept a one-month lock-in period for a sizeable allocation of shares, will open on 16 June.
CDSL’s IPO comprises only an offer for sale by its shareholders, including BSE, State Bank of India, Bank of Baroda and Calcutta Stock Exchange. The shareholders plan to sell a total of 33.65% stake in CDSL, as per the draft prospectus. BSE alone will sell 26%.
The securities depository firm had planned to float its IPO by the end of March but couldn’t do so because parent BSE didn’t meet certain regulatory norms related to the shareholding limit and maximum seats on CDSL’s board.
VCCircle reported last month that the company had resolved regulatory problems, putting the share sale back on track.
The Securities and Exchange Board of India had, in April 2012, announced several regulatory requirements for promoters and majority shareholders in market infrastructure institutions to develop capital markets and enhance transparency. These norms include ceding of special rights such as board representation, special quorum requirements and affirmative voting rights.
As per these norms, BSE was required to reduce its stake in CDSL to 24% by 2015. This deadline was extended till March this year and then till June. BSE holds a 50% stake in CDSL.
BSE, which went public in February through a Rs 1,243-crore IPO, had requested SEBI to increase the investment ceiling for stock exchanges in depositories and allow it to hold four seats on the depository’s board, two more than the norms. SEBI had rejected these requests.
CDSL had filed its draft red herring prospectus with SEBI on 28 December last year. The firm received SEBI approval on 8 February.
Axis Capital Ltd, Edelweiss Financial Services Ltd, Nomura Financial Advisory and Securities India Pvt Ltd and SBI Capital Markets Ltd are lead financial advisers to CDSL’s IPO. The company has also hired Haitong Securities India Pvt Ltd, IDBI Capital Markets & Securities Ltd, and Yes Securities (India) Ltd as merchant bankers to the proposed IPO.
Law firm AZB & Partners is the legal counsel to selling shareholders. Nishith Desai Associates represents the merchant bankers as Indian legal counsel while Herbert Smith Freehills LLP is the international counsel to the merchant bankers in the CDSL IPO.
CDSL facilitates deposits of securities by opening an account. Securities such as shares, debentures and bonds of investors are held in electronic form (dematerialized form) at the depositories. It has about 1.6 crore investor accounts.
The company reported consolidated net profit of Rs 85.78 crore for 2016-17 on revenue from operations of Rs 146 crore, according to the red herring prospectus. For 2015-16, its revenue from operations stood at Rs 122.85 crore compared with Rs 105.28 crore in the previous year. Consolidated net profit for 2015-16 was Rs 73.91 crore compared with 43.42 crore the year before.
