The initial public offering of Central Depository Services Ltd (CDSL), part-owned by stock exchange operator BSE Ltd, was covered twice on the first day of the issue on Monday thanks to retail and institutional investors.
The public offering of 24.83 million shares – excluding the anchor investors’ portion – received bids for nearly 52 million shares, or 2.09 times, stock-exchange data showed. The IPO will close two days later.
The retail investors’ portion was subscribed 3.5 times the shares reserved for them. The quota of shares reserved for institutional buyers was fully covered. The portion set aside for non-institutional investors, such as corporate houses and wealthy individuals, was covered 61%.
On Friday, the issue saw Abu Dhabi Investment Authority, FIL Investment (Mauritius), and top investment bank Goldman Sachs among the anchor investors participating in the IPO.
CDSL raised Rs 154.06 crore ($24 million) from the anchor investors by selling 10.34 million shares at Rs 149 apiece, the upper end of the Rs 145-149 price band. The anchor investors also included Indian asset managers DSP BlackRock, SBI Mutual Fund, ICICI Prudential Mutual Fund, IDFC Mutual Fund, Tata Mutual Fund, HDFC Mutual Fund.
The Mumbai-based securities depository firm is seeking a valuation of as much as Rs 1,557 crore ($241.40 million) through the IPO.
CDSL’s IPO, the first by a securities depository firm in India, 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%. Selling shareholders will raise a total of Rs 523.99 crore at the upper end of the price band.
CDSL had planned to float the IPO by the end of March but couldn’t do so because BSE didn’t meet certain regulatory norms. VCCircle reported last month that the company had resolved regulatory problems related to its IPO after the BSE assured it would comply with all requisite norms on the shareholding limit and maximum board seats in CDSL.
The Securities and Exchange Board of India (SEBI) had, in April 2012, announced several regulatory requirements for promoters and majority shareholders in market infrastructure institutions. The aim was to develop capital markets, drive financial inclusion and enhance transparency. These requirements included 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 to 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 stipulated. SEBI had rejected these requests.
CDSL filed its draft red herring prospectus with SEBI on 28 December last year. The firm received SEBI’s approval on 8 February.
Axis Capital Ltd, Edelweiss Financial Services Ltd, Nomura Financial Advisory and Securities India Pvt Ltd, SBI Capital Markets Ltd, Haitong Securities India Pvt Ltd, IDBI Capital Markets & Securities Ltd, and Yes Securities (India) Ltd are merchant bankers to the IPO.
Law firm AZB & Partners is legal counsel to selling shareholders for the CDSL IPO. Nishith Desai Associates represents the merchant bankers as Indian legal counsel while Herbert Smith Freehills LLP is international counsel to the merchant bankers.
CDSL facilitates deposits of securities by opening an account. Securities such as shares, debentures and bonds of investors are held in electronic form (dematerialised form) at the depository. It has about 1.6 crore investor accounts.
The company reported a consolidated net profit of Rs 85.78 crore for the financial year 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 the previous year. Consolidated net profit for 2015-16 was Rs 73.91 crore compared with 43.42 crore the year before.
Like this report? Sign up for our daily newsletter to get our top reports.
Leave Your Comment
1 year ago
The initial public offering of Central Depository Services Ltd (CDSL) received...
6 months ago
India primary equity markets continued with strong momentum entering into 2018,...
1 year ago
Sovereign wealth fund Abu Dhabi Investment Authority (ADIA), FIL Investments ...