Private equity funds may get to own majority stake in RTAs

PALAK SHAH Mumbai June 22 | Updated on June 22, 2018

This follows a SEBI decision not to accept the Gandhi panel recommendations on the issue

SEBI has not accepted the recommendations of the Gandhi Committee on ownership norms for share registrars and transfer agents (RTAs). As a result, private equity funds, including General Atlantic, Blackstone and Warburg Pincus may now be able to buy majority stake in RTAs, sources told BusinessLine.

An expert panel led by R Gandhi, former Deputy Governor of the RBI, had suggested to SEBI that only those entities that are governed by an international regulator under the purview of the International Organization of Securities Commissions (IOSCO) be allowed to own majority stakes in India’s qualified RTAs. Following the move, the RTAs had written to SEBI strongly opposing the recommendation.


Had the panel views been accepted, PE funds may have had to rethink their plans as most of them are not regulated entities. Large PE funds have been in talks to buy stake in RTAs.

The panel, which was tasked to consider whether RTAs could be classified as market infrastructure institutions (MIIs) such as stock exchanges, clearing corporations and depository participants that face ownership restrictions, had submitted its report on April 25. The panel was of the view that though RTAs do not have all the attributes of an MII, they should be classified as ‘important market intermediaries’ and mandated to follow high standards of corporate governance and ownership structure, and have only regulated entities as majority stakeholders.

RTAs such as CAMS and Karvy Computershare are a treasure trove of data on the stock market and mutual fund participants. Last year, New York-based Warburg Pincus was in talks with the NSE and others to buy a 49 per cent stake in CAMS.

This year, it seems to have revived talks with HDFC to buy its 5.1 per cent stake.

NSE Strategic Investment Corp, a subsidiary of NSE, owns 45 per cent in CAMS, while HDFC Group and Acsys hold 20 per cent and 35 per cent, respectively.

General Atlantic entered into an agreement to acquire 74 per cent in Karvy for about ₹1,500 crore in August 2017.

It planned to raise its stake to over 80 per cent in the RTA, which commands about 40 per cent market share in India.

Since SEBI has not put any ownership restrictions now, the stake-sale in RTAs may go through, sources close to the deal told BusinessLine.

The NSE has been trying to sell stake in CAMS after the BSE was discouraged by SEBI from buying a 51 per cent stake in the RTA. SEBI, under then Chairman CB Bhave in 2010, had dissuaded the BSE citing conflict of interest, as the exchange could have had the data of its rivals, too.

Published on June 22, 2018

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