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Shareholders of ICICI Securities have, on March 27, approved the proposal for the company’s merger with parent ICICI Bank. However, a majority of retail shareholders voted against the proposal.
The result showed that 71.89 per cent of shareholders voted for the delisting. While 83.8 per cent of institutional investors voted in favour of the delisting, only 32 per cent of non-institutional retail shareholders favoured it.
For the delisting and merger of a subsidiary with its holding company, regulations mandate at least two-third votes in favour of the proposal.
As per the proposed agreement, every 100 shares of ICICI Securities will fetch 67 shares of ICICI Bank. Following the merger, ICICI Securities will become a wholly-owned subsidiary of ICICI Bank, which currently holds 75 per cent stake.
Foreign and domestic institutional investors account for 16.68 per cent of ICICI Securities’ share capital, while non-institutional public shareholders hold 8.55 per cent stake, as of December 2023.
The go-ahead comes amid complaints by retail shareholders that ICICI Bank employees were allegedly ‘canvassing’ incessantly for their votes on social media, besides using repeated calls and messages to “influence the voting decision”.
‘Loss for minority shareholders’
In a recent note, Quantum Mutual Fund — a shareholder in both ICICI Securities and ICICI Bank —had said it would vote against the delisting as the swap ratio was detrimental to the interests of minority shareholders. It estimated the loss for unit holders across two schemes at ₹6.08 crore.
“The current swap ratio values ICICI Securities at a 30-77 per cent discount to its other listed peers based on consensus earnings forecast for fiscal year ending March 2024,” the fund house had said, adding that, with the IPO price as benchmark, the share swap ratio would have been 1.9 shares of ICICI Bank for every share of ICICI Securities, at a premium of 183 per cent to the current offer.
Reacting to the shareholder approval, shares of ICICI Securities fell over 3 per cent in early trade today at ₹719.20. On March 27, the stock had closed at ₹741.70.
Shares of ICICI Securities listed on April 4, 2018, at ₹432, at a 17 per cent discount to the IPO price of ₹520. A reverse merger at that time would have entailed a swap ratio of 1.65 ICICI Bank shares for every share of ICICI securities, at a premium of 146 per cent to the current offer.
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