Shares of ICICI Securities dropped by more than 4% after shareholders of India’s leading broking firm approved the delisting of the company. The scheme of arrangement to delist ICICI Securities was passed by its shareholders, leading to its transition into a wholly-owned subsidiary of ICICI Bank.
At 9:15 am, the shares of ICICI Securities were observed trading down by more than 4%, reaching intra-day lows of Rs 708 on the NSE.
Results of the shareholder vote released today indicate that approximately 72% of shareholder votes were cast in favor of merging ICICI Securities with ICICI Bank post the delisting process.
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Under the terms of the arrangement, shareholders of ICICI Securities are set to receive 67 shares of ICICI Bank for every 100 shares held in ICICI Securities.
While 83.8% of public institutional shareholders voted in favor of the proposal, only 32% of votes were in favor among public non-institutional shareholders. Nevertheless, the significant institutional holdings in ICICI Securities ensured the proposal’s clearance.
Last year, the board of ICICI Securities had approved a scheme of arrangement for the delisting of its shares, pursuant to which ICICI Bank would issue shares to the public shareholders of ICICI Securities, effectively making it a wholly-owned subsidiary.
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In November last year, ICICI Securities received “No objection” and “No adverse observations” letters from BSE and NSE, and in January, NCLT cleared the merger.
ICICI Bank intends to merge its 75% subsidiary, ICICI Securities, with itself, offering investors 0.67 shares of ICICI Bank for every one share in ICICI Securities. Notably, the largest public shareholder, Norges Fund Investment Bank, has voted in favor of the ICICI Securities delisting proposal, whereas Quantum Mutual Fund voted against it.
Quantum Mutual Fund estimates that the merger could result in a net loss of at least Rs 6.08 crore to its unitholders. The fund house contends that ICICI Bank’s proposal undervalues ICICI Securities, providing ICICI Bank access to the full business of ICICI Securities at a less-than-fair-market price.
