SEBI puts NSDL’s proposed IPO in abeyance

The Securities and Exchange Board of India has decided to put the proposed initial public offering of National Securities Depository Ltd (NSDL) on hold. 

On Thursday, the market regulator SEBI announced that they have put the “issuance of observations” regarding the NSDL IPO on abeyance. 

Generally, when there is probable cause for investigation against the company, the observation on the offer document filed by the issuer is kept in abeyance by the market regulator SEBI. 

In simple words, if there is strong reason to believe that a company needs to be investigated, the market regulator SEBI puts the review of their offer document on hold. This is like pressing the pause button on their plans to go public until the investigation is complete and any concerns are addressed. 

As per SEBI’s regulations, the abeyance period typically extends for 90 days. However, reports are suggesting that NSDL intends to communicate with the market regulator and appeal for a reduction in the abeyance period to 45 days. 

On July 7, the National Securities Depository Ltd filed its draft papers with the Securities and Exchange Board of India for its proposed initial public offering. The IPO consists of a complete offer-for-sale of approximately 5.72 crore equity shares by existing shareholders. 

The offer-for-sale includes shares being offloaded by various entities. IDBI Bank plans to sell 2.22 crore shares, the National Stock Exchange intends to offload 1.80 crore shares, Union Bank of India will sell 56.25 lakh shares, and both State Bank of India and HDFC Bank will each offer 40 lakh shares for sale. 

Additionally, the Administrator of the Specified Undertaking of the Unit Trust of India (SUUTI) will sell 34.15 lakh shares of the depository, as per the draft papers. 

As of March 31, 2023, NSDL holds the top position as the largest depository in India based on the number of issuers, active instruments, market share in demat value of settlement volume, and the value of assets held under custody. 

The average number of demat accounts opened with the company per day in financial Years 2021, 2022, and 2023 was 6,840, 15,528, and 15,139, respectively,” as per the DRHP.  

NSDL is a market infrastructure institution registered with SEBI, providing an extensive array of products and services to India’s financial and securities markets. It played a pioneering role in the dematerialization of securities in the country after the introduction of the Depositories Act in November 1996.