 "ICICI Securities to be 100% subsidiary of ICICI Bank upon delisting")
ICICI Securities will delist and become a wholly-owned subsidiary of parent ICICI Bank, the broking firm said in an exchange filing on Thursday after its board meeting.
The company stated that the board of directors had approved the delisting plans and agreed on a share swap ratio. The public shareholders of ICICI Securities would be allotted 67 shares of ICICI Bank for 100 shares each of the brokerage firm.
The delisting plans still need the approval from ICICI Bank, ICICI Securities’ shareholders and creditors, the Reserve Bank of India, National Company Law Tribunal, stock exchanges, and other regulatory and statutory bodies.
Citing reasons for the delisting, ICICI Bank said, "The securities broking business is inherently cyclical as it is significantly dependent on macro-economic environment and buoyancy in equities market. ICICI Securities is a low capital consuming business and the internal accruals are more than adequate to fund business growth."
As of March 2023, the promoter of the company, ICICI Bank, held 74.85 per cent in the broking firm while 25.15 per cent remained with public shareholders. The bank added that it is not expected to be required to make any additional capital infusion into its subsidiary.
“The public shareholders of ICICI Securities would get access to a much larger and more diversified business with greater stability in revenue. ICICI Securities' public shareholders would also receive a more liquid stock, which is owned by public shareholders,” said the company.
In the exchange filing, the company has also pointed out that the share exchange ratio is at a premium of the closing price before the announcement of the delisting plans.
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After the announcement, the shares jumped to their 52-week high of Rs 650 apiece. The stock closed at Rs 614.3 on the BSE at the close on Wednesday. Against the issue price of Rs 520, the stock has given a return of 18 per cent to date since 2018. The stock had reached its all-time high of Rs 879.6 in October 2021 and all-time low of Rs 191 in February 2019.
“With the company as a 100 per cent subsidiary, it is expected that both entities would be able to better capitalise on the synergies in line with the customer 360-degree focus of the bank,” said ICICI Securities in the exchange filing.
The brokerage firm reported consolidated net profit of Rs 262.68 crore in the fourth quarter of the 2022-23 financial year, a fall of nearly 23 per cent from the year ago period. The company’s net income too declined marginally to Rs 885 crore in the same quarter.
The board meeting for the financial results of the June quarter will be held on July 20.