ICICI Securities announced on June 29, 2023, that it will become a wholly owned subsidiary of its parent company, ICICI Bank. upon delisting.
According to a regulatory filing, the Board of Directors of ICICI Securities approved a draft scheme of arrangement for the delisting of equity shares. Notably, this is the first time in Indian corporate history that a company is delisting using a share swap arrangement in an exercise that does not include a merger of the company.
"...ICICI Bank will issue equity shares to the public shareholders of the Company in lieu of cancellation of their equity shares in the Company ("Scheme"), thereby making the Company a wholly owned subsidiary of ICICI Bank," said ICICI Securities in its regulatory filing.
As per the proposal, the public shareholders of ICICI Securities will receive 67 equity shares of ICICI Bank, with a face value of Rs 2 each, for every 100 equity shares they hold in ICICI Securities.
"While there are business synergies between the bank and the company, a consolidation by way of the merger is not permissible on account of regulatory restrictions on the bank from undertaking securities broking business departmentally," ICICI Securities said in the filing.
However, as a 100 percent subsidiary, both entities are expected to capitalise on synergies and align with the bank's customer 360-degree focus.
The report from independent registered valuers, along with the fairness opinion from the merchant banker, determined that the public shareholders of ICICI Securities will be allotted 67 equity shares of ICICI Bank for every 100 equity shares of ICICI Securities they hold. The equity shares held by public shareholders of ICICI Securities will be cancelled, resulting in a reduced share capital of ICICI Securities accordingly.
Purely as a matter of interest, at current prices the swap ratio seems to favour ICICI Securities’ shareholders. 100 shares of ICICI Securities would cost Rs 61,595, while 67 shares of ICICI Bank would be worth Rs 62,976.65; that’s a difference of Rs 1381.65.
First Published: Jun 29, 2023 4:10 PM IST
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