NSDL, India’s first depository, kicks off 2023 IPO plans; IDBI Bank, NSE may sell stake

National Securities Depository Limited (NSDL), the country’s oldest depository services firm, which revamped the Indian securities market by facilitating the holding and transfer of securities in dematerialised form, has kicked off plans to launch an initial public offer (IPO) in 2023, multiple industry sources with knowledge of the matter told Moneycontrol.

On August 30, Moneycontrol was the first to report that NSDL, which is backed by the likes of IDBI Bank and NSE, would pick seven investment banks for the proposed listing, namely ICICI Securities, Axis Capital, HSBC Securities, Motilal Oswal Investment Advisors, SBI Capital, HFC Bank and IDBI Capital.

Two other persons confirmed the IPO kick-off and the above timelines for the filing of the draft red herring prospectus adding that all aspects of the IPO would be taken to the NSDL board and its shareholders for approval.

All the four persons cited above spoke to Moneycontrol on condition of anonymity.

Moneycontrol could not elicit an immediate response from the investors and the merchant bankers. In response to an email query from Moneycontrol, NSDL said, “As per our policy, we would not like to comment on media speculations”

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 CDSL (Central Depository Services Limited) in 2017.

CDSL raised Rs 524 crore with the issue getting subscribed a whopping 170 times. Its stock has risen by 5.2 percent in the last six months.

Recently, NSDL acquired a 5.6 percent stake in the government-backed ONDC (Open Network for Digital Commerce).


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 the firm’s website, as of October 31, 2022, NSDL had 2,95,58,112 active investor accounts, 58,519 DP service centres and Rs 320.09 lakh crore of demat custody value.

The market share of NSDL in value of demat assets is more than 89 percent and its demat account holders are present in more than 99 percent of pin codes in the country and 189 countries across the globe. In FY22, NSDL’s consolidated revenue stood at Rs 821 crore, up 56 percent on a YoY basis. Its profits stood at Rs 212.32 crore versus a profit of Rs 188.55 crore in the previous fiscal.

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.

To be sure, in the depository system, securities are held in depository accounts, which is akin to holding funds in bank accounts. Transfer of ownership of securities is done through simple account transfers. This method does away with all the risks and hassles normally associated with paperwork. Consequently, the cost of transacting in a depository environment is considerably lower than the earlier method of transacting in certificates.

According to data released by NSDL and CDSL, the number of demat accounts in India crossed the 100 million mark for the first time in August 2022. From 40.9 million accounts in March 2020 (before the nationwide outbreak of Covid-19), the figure surged to 100.5 million.

“The kick-off for the NSDL IPO happened last week. It is likely to be a pure OFS (offer for sale) with dilution by multiple investors and IDBI Bank and NSE may participate,” said one of the persons cited above.

As of June 30, 2022, IDBI Bank held 26.1 percent and NSE held 24 percent in NSDL. Other shareholders include the likes of HDFC Bank with 9.95 percent, SBI with 5 percent, Deutsche Bank AG with 5 percent and Citibank, HSBC and Standard Chartered Bank with 3.13 percent each. The central government, through the Specified Undertaking Of The Unit Trust Of India (SUUTI) also holds 6.83 percent.

A second person told Moneycontrol that the final size of the IPO would depend on valuations, but the plan was to raise between Rs 2,500 crore and Rs 3,000 crore. “The filing of papers with Sebi may happen by February or March next year,” he added.

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