Shares of ICICI Bank are trading in the negative territory on Thursday after the private lender announced that it has received clearance from stock exchanges to delist ICICI Securities.
Informing via exchanges, the bank said it received a ‘no objection’ certificate on November 28, 2023, and November 29, 2023, from the National Stock Exchange and BSE Limited, respectively.
ICICI Bank on June 29, 2023, had approved the draft scheme of arrangement for the delisting of equity shares of ICICI Securities by issuing equity shares to the public shareholders for stake in ICICI Securities, making it a wholly-owned subsidiary of the bank.
The bank has already received approval for the arrangement from the Reserve Bank of India (RBI).
Amid the development, the ICICI Bank stock was trading 0.61% down today, in line with the broader market. The opened gap up but surged to an intra-day high of ₹941.05, taking its m-cap to ₹6.5 lakh crore. The ICICI Bank stock has currently trading 7.3% down as compared to the one-year high of ₹1,008.70 touched on August 24, 2023. Shares of stockbroking and allied services company ICICI Securities are trading up 1.12% at ₹670.95 on the BSE. The company's current m-cap stands at ₹21,682.42 crore.
Once they receive approvals from all organisations, ICICI Bank will issue equity shares to the public shareholders. The ICICI Securities public shareholders will get 67 equity shares of ICICI Bank for every 100 equity shares.
All employees holding employees' stock options and employees' stock units in ICICI Securities will receive employee stock options and employee stock units 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.
Explaining the rationale behind the decision, ICICI Bank has 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."
They company believes 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.