ICICI Securities delisting proposal may face resistance amid valuation concerns: Here's a timeline of events

At the time of the announcement, ICICI Securities' stock price had been hovering just above its initial public offering (IPO) issue price of 520 rupees, igniting debates about the stock's true value.

ICICI Bank unveiled its strategy to acquire a 25.15 percent stake in ICICI Securities. The bank plans to achieve this by allotting 67 shares of its own stock for every 100 shares of ICICI Securities held by the public. This move, detailed in a regulatory filing, would effectively cancel out ICICI Securities' shares, leading to full ownership by ICICI Bank.

Both ICICI Bank and ICICI Securities' boards show unanimous approval of the proposal, emphasising the anticipated synergies resulting from this merger. However, several key approvals remain pending, including those from shareholders, creditors, the Reserve Bank of India, the National Company Law Tribunal, and various stock exchanges.

As the proposal progresses, concerns over the valuation of ICICI Securities intensify. Shareholders, analysts, and market experts express doubts about the fairness of the deal, considering the low stock price relative to the company's potential.

Norway's Norges Bank Investment Management's Government Pension Fund Global, holding a significant 3.13 percent stake in ICICI Securities, is poised to vote against the delisting proposal. Simultaneously, South India-based Portfolio Management Service, which also commands approximately 3 percent of ICICI Securities, aligns itself against the delisting, according to the Moneycontrol report.

Despite holding shares on behalf of clients, the PMS retains the power of attorney to exercise voting rights,

These developments, as reported by Moneycontrol, indicate a growing clamour among investors and stakeholders who believe that ICICI Securities is undervalued and ripe for a re-rating.

The fate of ICICI Securities' delisting now hangs in the balance, with significant hurdles remaining on the regulatory front. Shareholders' votes, regulatory approvals, and a thorough evaluation of the company's valuation will shape the path forward.

ICICI Bank maintained that no additional capital infusion will be necessary, as ICICI Securities is viewed as a low capital-consuming business with ample internal resources for growth. As of March 31, 2023, ICICI Bank already holds 74.85 percent of ICICI Securities' equity shares, with the remaining 25.15 percent owned by the public. The delisting proposal envisions both entities capitalising on synergies, aligning with ICICI Bank's customer-centric strategy.