Private equity (PE) funds including General Atlantic, Blackstone and Warburg Pincus may have to rethink their plans to pick up majority stakes in India’s registrar and (share) transfer agents (RTAs).

An expert panel appointed by market regulator SEBI has recommended that only those entities that are governed by any of the international regulators under the purview of the International Organization of Securities Commissions (IOSCO) be allowed to own majority stakes in India’s qualified RTAs.

RTAs such as CAMS and Karvy Computershare are a treasure trove of data on stock market and mutual fund (MF) participants.

According to top sources, the panel headed by former RBI Governor R Gandhi submitted its report on April 25. It was tasked to consider whether RTAs could be classified as market infrastructure institutions (MIIs) like stock exchanges, clearing corporations and depository participants, which face ownership restrictions.

The committee said 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, the sources told BusinessLine .

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.

But SEBI has not allowed any deal to be finalised. 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.

Regulators of over 100 countries that are members of IOSCO set standards for securities market, and are currently grappling with money laundering. Most PE funds do not subscribe to IOSCO principals or regulators under its umbrella to avoid scrutiny. But the NSE and other banks that own CAMS are governed by SEBI laws and they may be able to retain their stakes if SEBI accepts the Gandhi Committee recommendations.

NSE has been trying to sell stake in CAMS after BSE was discouraged by SEBI from buying a 51 per cent stake in the RTA. SEBI had dissuaded BSE citing conflict of interest, as the exchange could have the data of its rivals, too. But NSE may still require SEBI’s permission to hold a majority stake in CAMS, experts said.

RTAs have the data of statement of accounts, payment credits and delivery instructions of all domestic investors. MFs have expressed concerns over data security and the increased costs associated with the entry of PE and venture capital funds in such institutions.

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