ICICI Slammed By Shareholders For Using Unsavoury Tactics To Push Investment Arm Merger

ICICI Bank is facing criticism over allegations of pressuring minority shareholders of ICICI Securities to support the proposed delisting of the broking and investment banking arm.

What Happened: Shareholders of ICICI Securities claimed on social media that executives from the bank directly contacted them, urging them to vote in favour of the resolution seeking the delisting of the broking subsidiary.

Legal experts and market participants suggest that such alleged actions could attract regulatory scrutiny regarding the voting process.

The e-voting process for the delisting of ICICI Securities began on March 22 and concluded on March 26.

What Minority Shareholders Object To: Under the proposed scheme, ICICI Bank aims to delist ICICI Securities through a share swap arrangement. According to the terms, for every 100 shares held, public shareholders in ICICI Securities would receive 67 shares of ICICI Bank.

However, the share swap ratio for delisting the brokerage has faced opposition from a segment of minority shareholders, who say it is below the fair value of ICICI Securities.

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Reports indicate that ICICI Bank’s largest public shareholder, Norges Fund Investment Bank, voted in favour of the resolution, while Quantum Mutual Fund voted against it.

Several shareholders of ICICI Securities took to social media, saying they received phone calls from ICICI Bank executives regarding this matter. Some individuals posted screenshots of call details and WhatsApp messages from bank staff, alleging that executives requested them to share the one-time password (OTP) during the voting process.

Additionally, some claimed that bank executives asked ICICI Securities shareholders to provide screenshots of their voting.

Market experts, including Deepak Shenoy from Capital Mind, suggest that such alleged actions could lead to scrutiny by the Securities and Exchange Board of India (Sebi).

“The current merger ratio values ICICI securities at a 30% to 77% discount to its other listed peers, according to Quantum Asset Management Company, which holds a stake in both entities. It voted against the resolution,” wrote Chander Bhatia, a shareholder.

Some shareholders speculate that these actions might backfire, prompting more shareholders to vote against the resolution.

Portfolio manager Nilesh Shetty from Quantum Advisors criticised the transaction, stating that it reflects poorly on ICICI Bank’s corporate governance.

Voting for the resolution ended on Tuesday, and the company plans to host a virtual call to discuss the resolution on Wednesday.

Manu Rishi Guptha, founder of MGR Capital, has advised all his clients to vote against the resolution, emphasising that the valuation should have at least been similar to the IPO valuation six years ago.

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