Proxy advisors InGovern and SES have advised investors to vote in favour of the ICICI Bank proposal to delist and merge ICICI Securities with itself.
Last June, ICICI Bank had announced the scheme of arrangement to merge ICICI Securities and make it a wholly-owned subsidiary. Under the proposed scheme of arrangement, the public shareholders of ICICI Securities will receive 67 equity shares of ICICI Bank for every 100 equity shares held in ICICI Securities.
The scheme of arrangement received approval from stock exchanges last November and is now subject to shareholders’ and NCLT’s approval. The court convened meeting of the shareholders of ICICI Bank and ICICI Securities is scheduled on March 27, 2024 to transact the proposed scheme.
Ahead of the shareholders’ meeting, two leading proxy advisors of the country — SES and InGovern — have recommended to vote in favour of the resolution.
InGovern said the broking business is inherently volatile and shareholders of ICICI Securities should gain from enhanced liquidity and better price discovery from ICICI Bank being offered as part of the merger. The combined entity with the strategic imperative of combining of wealth management, broking services with banking services will fuel growth and profitability and investors will get a share in a diversified business portfolio, it said.
SES said the average ratio of market share prices of ICICI Securities to ICICI Bank for the preceding year was at 0.56 times whereas the proposed share swap ratio is 0.67:1. Hence, it appears that shareholders of ICICI Securities are paid a premium to the market price differential.
The need for delisting was adequately addressed by the companies and no concerns were identified in this regard, it said.