A group of shareholders led by an investment manager based in Bengaluru has initiated proceedings with the National Company Law Tribunal concerning ICICI Bank’s proposal to remove its broking subsidiary, ICICI Securities, from Indian stock exchanges, according to report by The Economic Times.
In the previous month, approximately 72% of shareholders gave their approval for the scheme of arrangement facilitating the merger of ICICI Securities with its parent company, ICICI Bank.
The voting on the merger scheme occurred in compliance with an NCLT directive to evaluate the approval of the scheme.
Under the proposed delisting plan, ICICI Securities shareholders are set to receive 67 shares of ICICI Bank for every 100 shares they currently hold.
ICICI Bank has faced criticism for purportedly persuading minority shareholders of ICICI Securities (I-Sec) to back the private lender’s bid to delist the brokerage and investment banking division.
The action followed assertions made by certain ICICI Securities shareholders on social media, alleging direct contact from the bank’s executives urging them to vote in favor of the resolution advocating for the delisting of the broking subsidiary.
According to reports, Quantum Mutual Fund, which has opposed to ICICI Bank’s proposal to delist ICICI Securities, is also contemplating legal recourse against the bank. Additionally, the capital markets regulator, Sebi, has provided ICICI Bank with an exemption from the delisting regulation, which typically necessitates the listed holding company and its listed subsidiary to operate in the same line of business.
ICICI Bank defended its position by stating that independent valuers recommended the scheme of arrangement.
In the recent fourth quarter, ICICI Securities reported a net profit exceeding twice its previous figure, amounting to ₹536 crore, while the consolidated revenue from operations reached ₹1,543 crore.
During the January-March quarter, its debt-to-equity ratio increased to 4.25 from 3.26 in the corresponding quarter of FY2023. In contrast, the debt service coverage ratio decreased to 0.18% by March 31, 2024, compared to 0.21% in the quarter ending March 31, 2023.