What Makes ICICI Securities Delisting and Merger Important?
ICICI Securities, a leading brokerage in India, successfully secured the necessary votes to delist its stock, marking the end of a tumultuous week that included pushback from some retail investors and alleged efforts by parent company ICICI Bank to influence the outcome.
Approximately 71.9% of the minority shareholders of ICICI Securities voted in favor of the delisting and subsequent merger with ICICI Bank, surpassing the regulatory requirement of a two-thirds majority. Despite facing resistance from certain investors, the delisting was approved.
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Reports in the local media suggested that ICICI Bank made multiple attempts to convince shareholders of ICICI Securities to support the delisting. However, these details have not been independently verified by Reuters.
ICICI Bank, which owns a majority stake of around 75% in the brokerage, emphasized that its outreach to shareholders was aimed at providing information about the proposal and encouraging participation, rather than influencing votes.
Last year, ICICI Bank announced its intention to acquire the remaining stake in ICICI Securities through a share-swap deal. This news led to a surge in the share price, resulting in an implied offer price of approximately 726 rupees as of the previous day’s close.
Based on this price, ICICI Bank would pay an estimated 59 billion rupees ($707.9 million) for the stake, representing a slight discount compared to ICICI Securities’ closing price of 741.70 rupees on Wednesday.
Despite the approval from a majority of institutional public investors, some funds, minority and retail shareholders have criticized the deal, arguing that it undervalues the company. Quantum Asset Management, a shareholder with a 0.21% stake in ICICI Securities, believes that the offer price should be closer to 940 rupees per share based on comparable companies.
George Thomas, an associate fund manager at Quantum Asset, expressed disappointment that ICICI Bank did not revise the offer in light of changing market conditions since the delisting was announced.
Following the vote, ICICI Securities’ stock declined by 1.9%, while ICICI Bank’s shares rose by 0.9%. Institutional public investors showed stronger support for the delisting, with 84% in favor, compared to only 32% of non-institutional public shareholders.
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What Makes ICICI Securities Delisting and Merger Important? Norges Bank Investment Management, the largest public shareholder of ICICI Securities, voted in favor of the delisting. Over the past six years as a public company, ICICI Securities’ stock has increased by approximately 43%, while ICICI Bank’s shares have seen a four-fold rise in value.
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