LIC, the country’s largest domestic institutional investor, is close to picking up a 10 per cent stake in Central Depository Services Ltd (CDSL) from BSE for ₹800-850 crore.
BSE holds 54.2 per cent in CDSL and has to pare its stake to 24 per cent as per a SEBI directive asking stock exchanges to bring down their holdings in depositories to 24 per cent. The three-year deadline set by SEBI has expired and both BSE and NSE are looking for investors.
While BSE holds majority stake in CDSL, NSE holds 25.045 per cent in National Securities Depository Ltd (NSDL). SEBI in its board meeting on April 2, 2012 had accepted the recommendations of the Bimal Jalan Committee. The committee was set up to examine issues related to ownership and governance of stock exchanges, depositories and clearing corporations collectively called market infrastructure institutions (MIIs).
BSE sources confirmed that LIC could be one of the investors. Responding to a BusinessLine query on stake reduction in NSDL to comply with SEBI norms, Chitra Ramkrishna, Managing Director and CEO, NSE, said, “We have to comply. It is under way.”
NSDL had a consolidated profit of ₹52 crore and revenue of ₹160 crore for the year ended March 2015. CDSL’s profit stood at ₹43 crore on revenues of ₹105 crore.
Failure to comply with the SEBI diktat could attract penalties, say experts.
Tejesh Chitlangi, Partner IC Legal said, “The institutional shareholders of stock exchanges have been dissatisfied with the returns from their investments in stock exchanges in addition to the difficulties faced in exiting their shareholding. Since profitability of a depository is related to the performance of a stock exchange and the shareholders’ experience has not been pleasant there, hence selling of stake in depository by a stock exchange has understandably been difficult.”