The board of ICICI Securities on Thursday approved the draft scheme of arrangement for delisting the company’s shares, following which it will become a wholly owned subsidiary of ICICI Bank.
The proposed delisting is subject to approvals from shareholders and creditors, ICICI Bank, Reserve Bank of India, National Company Law Tribunal, stock exchanges, and other regulatory and statutory authorities.
Following the delisting, shares of ICICI Securities will be cancelled and shareholders will be allotted 67 shares of ICICI Bank for every 100 shares held, the company informed the exchanges.
Further, all employees holding employee stock options and employee stock units in ICICI Securities will receive employee stock options and employee stock units from ICICI Bank, based on the share exchange ratio.
The proposed share exchange ratio implies a premium to the market price of ICICI Securities’ shares as of June 23, when the stock had closed at Rs 563.05 on NSE. Following the news of delisting, shares of ICICI Securities touched a 52-week high of Rs 647 intraday on Monday. On Thursday, the stock closed 1.8 per cent higher at Rs 615.95.
The swap ratio has been based on the report of independent registered valuers, on which the merchant banker has given a fairness opinion.
ICICI Bank held 74.85 per cent stake in ICICI Securities as of March 2023 and the rest is held by public shareholders.
“While there are business synergies between the bank and the company, a consolidation by way of merger is not permissible on account of regulatory restrictions on the bank from undertaking securities broking business departmentally,” the notification said.
ICICI Bank offers banking services and ICICI Securities offers investment and personal finance services. With ICICI Securities as a subsidiary, both entities would be able to capitalise on the synergies, the company said.
Shareholders of ICICI Securities would get access to a “much larger and diversified business with greater stability in revenue” and a more liquid stock, which is owned by public shareholders, it added.