CAMS IPO upsized by 50% to facilitate NSE exit, to comprise 18.2 mn shares

The issue size is likely to be around Rs 2,200 crore, up from Rs 1,500 crore

The initial public offering (IPO) of Computer Age Management Services (CAMS) has been upsized 50 per cent to allow the NSE to divest its holdings. 

Earlier, the mutual fund (MF) transfer agency was looking to offload 12.16 million shares, or a 25 per cent stake, through the IPO. Instead, CAMS IPO will now comprise 18.2 million shares — nearly 36 per cent of the equity base.

Further, NSE Investments — an arm of the NSE — will be the only selling shareholder under the new structure. Earlier, four other shareholders besides the NSE — including HDFC and an arm of Warburg Pincus — were looking to divest their holdings in varying quantities.

The CAMS IPO size is now likely to be Rs 2,200 crore, up from Rs 1,500 crore as planned earlier. The issue is expected to hit the market next week.

Market players said the change in issue structure is to meet the Securities and Exchange Board of India’s (Sebi’s) diktat to the NSE. 

In February, the markets regulator, through a letter, directed the NSE to divest its entire 37.5 per cent stake in CAMS within a year. The directive came just a month after CAMS filed its draft offer document with Sebi.

 

 

Had CAMS gone ahead with the earlier IPO structure, the NSE would have been able to dilute only 12.5 per cent stake, while the remainder of the 25 per cent shareholding would have been locked in till September 2021. This would have potentially resulted in violation of the Sebi directive.

“To ensure that the IPO goes through at the same time and the NSE is able to meet Sebi’s diktat, the IPO structure had to undergo a change. All the selling shareholders are on board with the new plan,” said a person with knowledge of the development.

Apart from selling 36 per cent in the IPO, the exchange has signed a share purchase agreement (SPA) to sell the residual 1 per cent.

“In order to divest its entire shareholding in our company and comply with terms of the Sebi letter, NSE Investments intends to sell 38,400 equity shares by way of NSE Investments’ SPA and 18,246,600 equity shares in the IPO. If NSE Investments is unable to divest its entire shareholding in the company in the manner set out above, on account of factors beyond its control, it may be required to explore alternatives to ensure compliance with the Sebi letter, including seeking exemption from the lock-in requirements applicable to the pre-offer shareholders,” CAMS said in its offer document filed with the Registrar of Companies on Tuesday.

Great Terrain, an arm of Warburg Pincus, was looking to sell around 8 per cent through the IPO earlier. It, too, has signed SPAs with a clutch of institutional investors to sell its 12.5 per cent stake ahead of the IPO.