ICICI Bank has approved a proposal to delist ICICI Securities, making it a wholly-owned subsidiary of the bank. ICICI Securities, a leading retail-led equity franchise, financial product distributor, and investment bank in India, has been growing its operations since its inception in May 1995.
The ICICI Bank board of directors approved the draft scheme of arrangement for the delisting at a meeting on Thursday. The plan involves issuing ICICI Bank equity shares to the public shareholders of ICICI Securities in exchange for the cancellation of their shares, according to a regulatory filing by the bank.
The Math: Upon delisting, ICICI Securities will become a wholly-owned subsidiary of ICICI Bank, subject to necessary approvals. The scheme will see public shareholders of ICICI Securities receive 67 ICICI Bank equity shares for every 100 ICICI Securities equity shares they hold.
Why is ICICI Bank delisting ICICI Securities?
As of March 31, 2023, ICICI Bank held 74.85% of ICICI Securities’ equity shares, with the remaining 25.15% held by the public. The scheme’s implementation depends on approvals from shareholders and creditors of the bank and company, the Reserve Bank of India (RBI), the National Company Law Tribunal, BSE Limited, the National Stock Exchange of India Limited, and other statutory and regulatory authorities.
ICICI Securities stated in a regulatory filing that while there are business synergies between the bank and the company, a merger is not permissible due to regulatory restrictions preventing the bank from undertaking securities broking business departmentally.
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The acquisition is expected to be completed in the next 12-15 months, subject to various regulatory approvals. ICICI Securities, which reported a net profit of ₹1,118 crore and total assets of ₹15,569 crore as of March 31, 2023, will see the cancellation of equity shares held by its public shareholders, resulting in a consequent reduction in its share capital.
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