ICICI Securities Share Price fall, after Institutional Investors approve ICICI Securities Delisting

Institutional Investors Override Retail Opposition

Despite facing resistance from retail investors, institutional shareholders have given the green light to the proposal to delist ICICI Securities and merge it with its parent company, ICICI Bank. Public institutional shareholders have shown overwhelming support for the proposal with 83.8% voting in favor. On the flip side, the proposal faced opposition from 67.8% of non-institutional shareholders who are part of the general public.

Because large institutional investors own a significant portion of ICICI Securities, they were able to support and pass the proposal. Together, foreign and domestic institutional investors hold 16.68% of the company. In comparison, non institutional public shareholders only have 8.55% ownership as of 31 December 2023 according to data from the stock exchange.

Proxy advisory firms such as Institutional Investor Advisory Services or IiAS, ISS, Stakeholder Empowerment Services and InGovern Research Services have backed the delisting of ICICI Securities. These firms have advised institutional investors to support the proposal, contributing to its approval despite retail investor opposition.

Quantum Mutual Fund, a minor shareholder in ICICI Securities, initially opposed the proposal fearing it would harm its investors interests. They estimated the merger would lead to a loss of at least Rs 6.08 crore for their investors. Quantum believes that ICICI Bank's offer undervalues ICICI Securities and gives the bank access to its entire business for less than its fair market price.

Also Read ICICI Securities Delisting: Why the Surge in Mutual Fund Investments?

Delisting Plan and Merger Details

ICICI Securities unveiled its delisting strategy on 25 June 2023, using a scheme of arrangement. Under this plan, ICICI Securities shareholders will receive 67 shares of ICICI Bank for every 100 shares they own. If executed successfully, ICICI Securities will function as a fully owned subsidiary of ICICI Bank. By 31 December 2023, ICICI Bank owned 74.77% of ICICI Securities equity shares while the public held the remaining 25.23%.

ICICI Securities expects that becoming a full subsidiary of ICICI Bank will allow both companies to benefit from working together more closely. They believe this merger will make things run smoother and create more value for everyone involved.

The announcement of the delisting proposal has led to a decline in ICICI Securities share price. In morning trade on Thursday, 28 March, the stock faced a drop of over 4% opening at ₹720.80 against the previous close of ₹741.10. However, the stock later recovered slightly, trading down 2.64% at ₹721.55 on BSE at 10.10 am.