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MUMBAI : National Securities Depository Ltd (NSDL), India’s first and biggest depository services company, has initiated talks with investment banks for an initial public offering worth 4,500 crore, two people aware of the development said.

NSDL was set up in 1996 after the enactment of the Depositories Act. As of 31 May, it had over 27.6 million investor accounts, with a demat custody value of 297.55 trillion. The depository has a market share of more than 89% in terms of demat assets value.

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India’s only other depository—Central Depository Services (India) Ltd (CDSL)—went public in 2017, raising 524 crore in an IPO which was subscribed 170 times. CDSL was set up in 1999.

“NSDL has initiated talks on its planned IPO. Most top domestic and foreign investment banks are vying for the IPO mandate, and the mandates may be finalized in the next few weeks. The IPO is mostly going to be a secondary share sale by existing investors, while some small amount may be raised as part of the IPO. Most shareholders of the company, including several public sector bank shareholders and other investors in the company are likely to sell part of their shareholding through the IPO," one of the two people cited above said on condition of anonymity.

NSDL’s biggest shareholders are IDBI Bank and the National Stock Exchange (NSE), holding 26% and 24% stakes, respectively. Other state-owned lenders State Bank of India, Union Bank of India and Canara Bank own 5%, 2.81% and 2.30%, respectively, while the central government, through the Specified Undertaking of the Unit Trust of India (SUUTI) holds 6.83%. Other NSDL shareholders include HDFC Bank, Citibank, HSBC, Standard Chartered Bank, Deutsche Bank, Kotak Mahindra Life Insurance Co. Ltd and IIFL Special Opportunities Fund.

The IPO is likely to be worth at least 4,500 crore at a valuation of 16,000-17,000 crore, said the second person cited above, also speaking on the condition of anonymity.

An email sent to NSDL remained unanswered till press time.

For the financial year ending 31 March 2022, NSDL reported a consolidated revenue of 821.29 crore, up 56% from the previous fiscal’s 524.30 crore. The company reported a profit of 212.32 crore in FY22, compared to a profit of 188.55 crore in the previous fiscal.

NSDL’s depository services contributed 369.26 crore revenue in FY22, followed by its banking services business which contributed 299.24 crore and database management services which brought in 92.60 crore.

NSDL’s plans to go public come at a time when demat account openings have exploded due to the post-covid rally in stock markets. After a sharp jump in new demat accounts to 14.2 million in FY21, openings surged further to 34.7 million in FY22. The total number of demat accounts in the country stood at 94.77 million at the end of 31 May 2022. To be sure, demat account openings are expected to slow down this year due to the correction in stock prices and volatility due to global macroeconomic challenges.

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