The Bombay Stock Exchange (BSE) has acquired the controlling stake in Central Depository Services Ltd (CDSL) by purchasing 16 per cent more from three banks, people with direct knowledge of the deal said.
Asia’s oldest stock exchange has bought a 7.5 per cent stake from HDFC Bank, 4.5 per cent from Bank of Baroda (BoB) and 4 per cent stake from Bank of India (BoI), taking its holding in the depository to 54.5 per cent, these people said. The deal was struck at Rs 50-55 per share, valuing CDSL at Rs 522-575 crore.
“By acquiring controlling stake in CDSL, BSE wants to expand the business of the depository,” a source said.
An e-mail query sent to BSE’s corporate communications department and CDSL’s Managing Director and CEO, V V Raut, remained unanswered. Madhu Kannan, BSE’s managing director and CEO, declined to comment.
BSE’s latest move comes after its bigger rival, National Stock Exchange (NSE), increased its holding in National Securities Depository Ltd (NSDL) to 25.05 per cent by purchasing 9.42 per cent stake from Special Undertaking of the Unit Trust of India (SUUTI) in March this year.
Before the latest stake purchase, BSE was the single largest shareholder in CDSL, with 38.52 per cent stake. HDFC Bank had 14.36 per cent holding in the depository, while Bank of India and Bank of Baroda held 9.57 per cent each.
State Bank of India (9.57 per cent), Standard Chartered Bank (7.18 per cent) and Canara Bank (6.45 per cent) are the other major shareholders of CDSL.
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The issue of BSE’s plan to acquire controlling stake in CDSL had become contentious with the latter opposing the move. In February this year, BSE had requested CDSL to issue preferential shares to the exchange to increase its holding in the depository above 51 per cent. CDSL had rejected the proposal as it wanted to remain independent fearing loss of business from members of other stock exchanges.
In March, BSE had objected to CDSL’s plan to move out of the iconic Phiroze Jeejeebhoy Towers and shift to a new location in central Mumbai. CDSL wanted to purchase a 45,000 sq ft office at Ruby Mill compound in Dadar due to space constraints at its present office and security issues.
As of June 14, CDSL had 67.20 lakh investor accounts, while its bigger competitor NSDL had 1.02 crore accounts.
As per the present norms, sponsors of a depository have to maintain 51 per cent stake. However, this is being reviewed by the Bimal Jalan committee constituted by the Securities and Exchange Board of India (Sebi). The committee is reviewing ownership and governance of market infrastructure institutions like stock exchanges, depositories and clearing corporations.