ICICI Securities – 16 Fund Houses Vote To Delist The Company

ICICI Securities, the broking subsidiary of ICICI Bank, has received approval from shareholders to delist its stock, paving the way for a merger with its parent company.  During a vote held recently, 16 fund houses voted in favour while 7 opposed the plan. Among public institutional investors, who hold 16.68% of the company, 83.8% supported the delisting, while only 32% of non-institutional public shareholders, holding 8.55%, voted in favour.

Financial Implications

ICICI Bank aims to acquire the remaining 25% stake in ICICI Securities through a share-swap arrangement, valuing the deal at approximately Rs.5,900 crore. The implied offer price is about Rs.726 per share, slightly below ICICI Securities’ recent closing price of Rs.733. Quantum Asset Management, a vocal opponent with a 0.21% stake, argued the offer should be closer to Rs. 940 per share based on industry valuations.

Approval for Delisting 

ICICI Securities has received approval for delisting from 16 fund houses, including prominent names such as HDFC Mutual Fund, SBI Mutual Fund, and Aditya Birla Sun Life AMC. This approval, representing significant institutional support, paves the way for its merger with ICICI Bank, allowing shareholders to swap their ICICI Securities shares for ICICI Bank shares​ 

Allegations of Influence

The delisting process has faced allegations of undue influence by ICICI Bank, which holds a 75% stake in ICICI Securities and abstained from voting. Minority shareholders, including Quantum Asset Management, have raised concerns about the fairness of the delisting process, prompting regulatory scrutiny and objections regarding potential conflicts of interest and the adequacy of the offered price.

Market Reaction and Future Steps

Following the approval, the delisting will mark the end of ICICI Securities’ six-year tenure as a publicly traded company, during which its stock appreciated by about 43%. The next steps involve completing the share-swap arrangement to finalize the merger.

Conclusion: The delisting of ICICI Securities highlights the intent of ICICI Bank to streamline its operations. Despite the approval, the process has not been without controversy, as minority shareholders have expressed dissatisfaction with the offer price and raised concerns about the influence exerted by ICICI Bank. As the merger proceeds, the merger will be closely watched by market participants and regulators alike.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.