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Business News/ Markets / NSDL files DRHP papers with SEBI: Here's all you need to know about it
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NSDL files DRHP papers with SEBI: Here's all you need to know about it

The Red Herring Prospectus filed by NSDL states that the equity shares offered through the IPO are proposed to be listed on the Bombay Stock Exchange (BSE).

The NSDL IPO will be a pure Offer for Sale (OFS) and will consist of up to 57,260,001 equity shares. Premium
The NSDL IPO will be a pure Offer for Sale (OFS) and will consist of up to 57,260,001 equity shares.

National Securities Depository Limited (NSDL), a leading market infrastructure institution in India, has recently filed its Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI).

This move marks an important step for NSDL as it prepares to launch its Initial Public Offering (IPO).

NSDL, established in 1996, played a pioneering role in introducing theconcept of dematerialization of securities in India. It has since become the largest depository in the country, boasting an impressive list of achievements.

According to a report by CRISIL, as of March 31, 2023, NSDL has emerged as the leader in various aspects, including the number of issuers, active instruments, market share in demat value of settlement volume, and the value of assets held under custody.

Let us take a look at the details of the IPO.

How will the shares be offered?

The NSDL IPO will be a pure Offer for Sale (OFS) and will consist of up to 57,260,001 equity shares.

The offer for sale will include shares from various stakeholders, including IDBI Bank Limited, Union Bank of India, National Stock Exchange of India Limited, State Bank of India, HDFC Bank Limited, and the Administrator of the Specified Undertaking of the Unit Trust of India (SUUTI).

State Bank of India (SBI) has announced its plans to divest up to 2% of its equity stake in NSDL, which amounts to approximately 40,00,000 equity shares.

READ MORE: IPO market is buzzing! Is this the right time to invest? Here's what experts say

In addition to this, IDBI Bank intends to sell up to 2.22 crore shares, while the National Stock Exchange plans to divest 1.8 crore shares. Union Bank of India will offload 56.25 lakh shares, and the Administrator of the Specified Undertaking of the Unit Trust of India will divest 34.15 lakh shares.

Furthermore, private lender HDFC Bank has expressed its interest in participating in the NSDL IPO through an offer for sale, with the intention to divest up to a 2% stake.

Who will be managing the NSDL IPO process?

ICICI Securities Limited, HSBC Securities and Capital Markets (India) Private Limited, Axis Capital Limited, IDBI Capital Markets & Securities Limited and SBI Capital Markets Limited, Motilal Oswal Investment Advisors Limited are the Book Running Lead Managers (BRLMs) for the issue, responsible for managing the IPO process.

Where will the NSDL IPO be listed?

The Red Herring Prospectus states that the equity shares offered through the IPO are proposed to be listed on the Bombay Stock Exchange (BSE).

If the IPO plans flourishes, NSDL will join Central Depository Services Limited (CDSL) as the second depository services company to be listed on the Indian stock exchanges. CDSL had a highly successful market debut in 2017, raising Rs 524 crore with the issue being oversubscribed a remarkable 170 times.

READ MORE: IPOs: What does 'building a book' mean and how is a price band fixed?

NSDL will undoubtedly aim to replicate such success and attract investor interest with its IPO.

Why is NSDL IPO significant?

The NSDL IPO holds noteworthy potential, given the company's strong market position and track record. It has over 31.46 million active demat accounts and services 99.99% of the value of equity, debt, and other securities held by foreign portfolio investors in dematerialized form in India.

NSDL's contributions to the Indian financial landscape extend beyond depository services. Over the years, it has diversified its offerings, including PAN card services, online tax accounting systems, and mobile-based share delivery facilities.

READ MORE: What is a 'Greenshoe' option in an IPO and how does it work? Here's all you need to know

NSDL was also appointed as the registrar of the Unique Identification System, leading to the creation of the Aadhaar card. In 2015, it received a license from the Reserve Bank of India (RBI) to open a payment bank, further expanding its presence in the banking sector.

What lies ahead for the investors?

As the IPO journey progresses, investors will closely watch NSDL's valuation, growth prospects, and overall market sentiments. Given its strong market position and the success of its peer CDSL, NSDL has the potential to generate considerable interest among investors looking to capitalize on the growth of India's financial and securities markets.

NSDL's filing of the DRHP with SEBI for its IPO marks an important milestone for the company. The upcoming IPO presents an opportunity for investors to participate in the growth story of India's financial and securities markets.

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Published: 11 Jul 2023, 03:51 PM IST
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