ICICI Bank takes over ICICI Securities

ICICI Bank takes over ICICI Securities

Hi There,

ICICI Securities has announced that it will delist and become a fully-owned subsidiary of its parent company ICICI Bank. The delisting process is expected to be completed in 12-15 months. The board of directors approved the proposal at a meeting of the company on 29 June 2023.  According to the agreement, ICICI Bank will issue equity shares to public shareholders of the domestic brokerage in place of the cancellation of their equity shares in the company.

ICICI Securities shareholders will be allotted 67 equity shares of ICICI Bank for every 100 equity shares of the company. The scheme is subject to receipt of requisite approvals from ICICI Bank and the company’s shareholders and creditors, the Reserve Bank of India, the National Company Law Tribunal, stock exchanges, and other regulatory and statutory authorities.

ICICI Securities stock closed at Rs 615.95 and ICICI Bank closed at Rs 939.95 on the NSE on June 28. Based on this, the share swap ratio indicates that ICICI Securities’ shareholders are getting only a two percent premium. As of March 2023, ICICI Bank held a 74.85 percent stake in ICICI Securities.

Reason Behind the Merging

ICICI Bank said that “ICICI Securities is a low capital consuming business and the internal accruals are more than adequate to fund business growth. ICICI Bank is not expected to be required to make additional capital infusion into the company.” With ICICI Securities as a 100 percent subsidiary, it is expected that both entities would be able to better capitalize on the synergies in line with the Customer 360 focus of the bank.

The securities broking business is inherently cyclical as it is significantly dependent on the macroeconomic environment and buoyancy in the equities market. In the Fourth Quarter of Financial Year 2023,  ICICI Securities reported a consolidated net profit of Rs 263 crore, down 23 percent as against Rs 340 crore reported in the corresponding period of last year. Revenue from operations during the quarter stood at Rs 885 crore, also down marginally as against Rs 892 crore in the year-ago period.

ICICI Bank Portfolio after taking over ICICI Securities

ICICI Bank occupied 74.85% of the equity shares of ICICI Securities by March 31, 2023,  and the public occupied the balance 25.15% of equity shares.

According to ICICI Securities as a 100% subsidiary, it is expected that both organizations would be able to better capitalize on the synergies in line with the customer all-round focus of the bank.

The merchant banker has given a fair opinion based on the independent registered valuers’ valuation report that the ICICI Securities public shareholders would be allotted 67 equity shares of the ICICI bank for every 100 equity shares of ICICI Securities.

The shares held by the public of ICICI securities will be canceled and the capital of ICICI Securities should be reduced accordingly to such extent compared to the share value of ICICI bank shares.

At the same time, The public shareholders of ICICI Securities would get access to a most stable revenue-generating stock, a high volume traded entity, a much larger and more diversified business, the company said, which is a good thing for public shareholders.

“The proposed share exchange ratio implies a premium to the market price of ICICI Securities’ shares as of June 23, 2023, (before the Board meeting notification issued to stock exchanges on June 25, 2023),” it said.

The delisting is subject to receipt of requisite approvals from ICICI Bank. So, Investors have nothing to worry about as the company is the parent company and you could expect a better result than before.

ICICI Securities Shareholding Pattern