The Securities and Exchange Board of India (SEBI) has officially approved the highly anticipated initial public offering (IPO) of the National Securities Depository Limited (NSDL), a key player in the Indian capital market. NSDL is responsible for managing the majority of securities held and settled in dematerialized form in India. This marks a significant milestone for the company and the overall growth of the securities market.

NSDL had filed its Draft Red Herring Prospectus (DRHP) on July 7, 2023, outlining its plans for the IPO. The offering is structured as a pure offer for sale (OFS), where NSE (National Stock Exchange) and IDBI Bank are planning to divest their stakes. The approval comes after a brief pause in August 2023 when SEBI placed the DRHP in abeyance, a move that can occur during ongoing investigations or delays in required information from regulatory bodies.

According to the DRHP, NSDL is set to offer 57.3 million shares through its six shareholders. Among them, IDBI Bank plans to sell 22.2 million shares, while the NSE intends to sell 18 million shares, representing a nine percent stake in the depository. Additional shares will be sold by Union Bank of India (5.62 million shares), State Bank of India (4 million shares), and the Administrator of the Specified Undertaking of the Unit Trust of India (SUUTI), which will sell 3.4 million shares. HDFC Bank also participates in the IPO.

Notably, shares of HDFC Bank saw a positive response, rising over one percent on October 8, trading at Rs 1,636.6 per share on the NSE, even amidst a generally flat market. HDFC Bank plans to sell a two percent stake in the IPO and currently holds an 8.95 percent stake in NSDL.

Once listed, NSDL will become the second depository services company to go public on domestic exchanges, following the successful market debut of its peer, Central Depository Services Limited (CDSL), in 2017. This development is expected to bolster investor confidence and contribute to the overall growth of the Indian capital market.

As the IPO unfolds, investors and market analysts are closely watching the performance of CDSL as well, which saw its stock price tumble over a percent to trade around Rs 1,355 per share at 9:50 am on the same day.

This approval marks a new chapter for NSDL and the Indian financial ecosystem, promoting greater transparency and operational efficiency in the securities market while enhancing investor participation.

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