In a significant development, shares of ICICI Securities, one of India’s leading brokerage firms, experienced a notable drop of over 4% following the approval of the company’s delisting proposal by shareholders. The decision paves the way for ICICI Securities to become a wholly-owned subsidiary of ICICI Bank.
The outcome of the shareholder vote, released today, revealed that approximately 72% of shareholders supported the scheme of arrangement to merge ICICI Securities with ICICI Bank post the delisting process.
This move signifies a significant transition for ICICI Securities, aligning it more closely with its parent company, ICICI Bank, and potentially unlocking synergies and operational efficiencies in the long term.
At the opening bell, ICICI Securities shares were observed trading down by more than 4%, reaching intra-day lows of Rs 708 on the National Stock Exchange (NSE), reflecting investor sentiment following the announcement.
The delisting approval marks a pivotal moment in the evolution of ICICI Securities and underscores the company’s commitment to strategic realignment and long-term growth objectives.
Under the proposed arrangement, ICICI Securities shareholders are slated to receive 67 shares of ICICI Bank for every 100 shares held in ICICI Securities. Despite a split in support levels, with 83.8% of public institutional shareholders voting in favor compared to only 32% of public non-institutional shareholders, the substantial institutional ownership in ICICI Securities ensured the proposal’s approval.
This development underscores a pivotal moment in ICICI Securities’ corporate trajectory. Notably, the company’s board had previously greenlit a scheme of arrangement for the delisting of its shares last year. This scheme entails ICICI Bank issuing shares to the public shareholders of ICICI Securities, thereby transitioning it into a wholly-owned subsidiary of the bank.
Last November, ICICI Securities obtained “No Objection” and “No Adverse Observations” letters from both the BSE and NSE, marking significant progress in its merger proceedings. Subsequently, in January, the National Company Law Tribunal (NCLT) granted approval for the merger.
ICICI Bank’s merger plan involves integrating its 75% subsidiary, ICICI Securities, into its operations. As part of this arrangement, investors are offered 0.67 shares of ICICI Bank for every one share held in ICICI Securities. Notably, the largest public shareholder, Norges Fund Investment Bank, has cast its vote in favor of the ICICI Securities delisting proposal. However, Quantum Mutual Fund has opposed the proposal.
Quantum Mutual Fund has expressed concerns regarding the potential financial implications of the merger. They estimate that the merger could result in a net loss of at least Rs 6.08 crore for its unitholders. The fund house contends that ICICI Bank’s proposal undervalues ICICI Securities, providing the bank access to ICICI Securities’ entire business at a price below its fair market value.
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