ICICI Bank board approves delisting of ICICI Securities; swap ratio at 67 for 100

ICICI Securities shares dropped 2.26% today after the ICICI Bank board approved a “draft scheme of arrangement” for the delisting of equity shares on the stock exchanges. After this, ICICI Bank will issue equity shares to the public shareholders in return for the cancellation of their equity shares of ICICI Securities, which will make the company an ICICI Bank subsidiary.

"The Board of Directors of the Company, at its Meeting held today i.e. June 29, 2023, approved the draft scheme of arrangement for delisting of equity shares of the Company, pursuant to which 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," a filing by ICICI Bank said.

According to the company, its public shareholders will get 67 equity shares of ICICI Bank for every 100 equity shares. "All the public shareholders of the Company would be allotted 67 equity shares of ICICI Bank of face value~ 2/-each for every 100 equity shares of the Company of face value ~ 5/-each ("Share Exchange Ratio")," the private lender said.

All employees holding employees' stock options and employees' stock units in ICICI Securities will receive employee stock options and employee stock units, as applicable, from ICICI Bank. It'll be based on the share exchange ratio and the stock options, and employee stock units granted by ICICI Securities will stand cancelled, the brokerage company said.

The scheme is yet to receive approvals from ICICI Bank’s shareholders and creditors, and other institutions like the Reserve Bank of India, National Company Law Tribunal, stock exchanges, and regulatory and statutory authorities.

Explaining the reasons behind the arrangement, ICICI Bank said both companies will be able to leverage the strong composite proposition to provide holistic financial services to existing and new customers. "With the company as a 100% subsidiary, it is expected that both entities would be able to better capitalise on the synergies in line with the customer 360-degree focus of the bank."

It also said that 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.

As on March 31, 2023, ICICI Bank held 74.85% of the equity shares of ICICI Securities and the balance 25.15% equity shares were held by the public. After the approval of the scheme, ICICI Securities will become a wholly-owned subsidiary of the bank.

The ICICI Securities stock has seen a 12.31% jump in the past week. At the current share price of ₹600.40 on the NSE, the company's market cap stands at ₹19,463.50 crore. Meanwhile, ICICI Bank Ltd has also seen a 0.31% drop in its share price today, in contrast with BSE benchmark Sensex and Nifty, both of which are in green at 64,436.29 and 19,113.75, respectively.