ICICI Securities minority investors to challenge delisting

Some individual investors of ICICI Securities have formed a 'joint action group' with a plan to object to this scheme of arrangement in the NCLT. According to a person familiar with the development, over 200 retail shareholders of the brokerage have already joined this group and have begun raising funds through crowdfunding. These shareholders have been asked to give a Power of Attorney, nominating Gupta as their representative to execute the legal proceedings. The group has yet to appoint lawyers to file the lawsuit.

Quantum Mutual Fund, which has opposed ICICI Bank's plan to delist ICICI Securities, is also considering legal action against the bank. "We are currently evaluating various options available to protect the interest of our investors," said Ajit Dayal, founder of Quantum Advisors, sponsor of Quantum Mutual Fund, to ET.

The shareholders will likely challenge the special exemption for the granted by the Securities and Exchange Board of India, said the person in the know quoted above.

The capital markets regulator has granted ICICI Bank exemption from the delisting regulation involving the requirement of the listed holding company and listed subsidiary being in the same line of business. An email query sent to Sebi did not elicit any response until press time.

Shareholders will also oppose the share swap ratio offered by ICICI Bank for the delisting. ICICI Securities' shareholders will receive 67 shares of ICICI Bank for every 100 shares held. Investors are contending that the ratio is against their interests on the grounds that ICICI Securities' profits are growing.

ICICI Bank in its defence said the scheme of arrangement was recommended by independent valuers.

In the voting process that ended on March 27, investors holding 71.89% of the lender's shares favoured the proposal, while those owning 28.11% voted against it. According to the filings, 84% of institutional investors supported the scheme, while 68% of non-institutional investors opposed it.

After the announcement of the scheme of arrangements on June 24, 2023, the stock rallied nearly 54% to hit a high of ₹865 on January 31, 2024. It ended flat at ₹724 on Tuesday.