Proxy advisors positive on ICICI Securities delisting proposal
In its report, InGovern said the broking business is inherently volatile. By receiving shares of the relatively stable shareholding in the parent company, shareholders of ICICI Securities benefit from improved liquidity and enhanced price discovery.
Mumbai: Proxy advisory firms such as Stakeholder Empowerment Services () and have recommended institutional to vote in favour of delisting .The court-convened meeting of the shareholders of and ICICI Securities is scheduled for March 27.
In June last year, ICICI Bank announced the scheme of arrangement, which will make ICICI Securities a wholly-owned subsidiary of the bank. Under the proposed scheme of arrangement, the public shareholders of ICICI Securities will receive 67 shares of ICICI Bank for every 100 shares they hold. A section of minority shareholders of ICICI Securities is opposing this deal on the grounds that the swap ratio is unfavourable for them.
In its report, InGovern said the broking business is inherently volatile. By receiving shares of the relatively stable shareholding in the parent company, shareholders of ICICI Securities benefit from improved liquidity and enhanced price discovery.
"The combined entity with the strategic imperative of combining wealth management, broking services with banking services will fuel growth and profitability, and investors will get a share in a diversified business portfolio," InGovern said.
On Thursday, shares of ICICI Securities ended at ₹736, while ICICI Bank shares ended at ₹1,084. ICICI Securities is currently trading at just a 1.34% premium to the swap ratio, a decline from the nearly 15% premium observed at the beginning of the month. ICICI Securities shares declined 10% in two weeks, whereas ICICI Bank shares gained nearly 3%.
According to SES, the public shareholders of ICICI Securities will receive the listed equity shares of ICICI Bank, which are comparatively more liquid after the scheme becomes effective. The need for delisting was adequately addressed by the companies, and no concerns were identified in this regard, SES said in a report.
"The average ratio of market share prices of ICICI Securities to ICICI Bank for the preceding year stood at 0.56 times whereas the proposed share swap ratio is 0.67:1. Hence, it appears that shareholders of ICICI Securities are paid a premium vis-a-vis the market price differential," the report stated.
The cut-off date for determining the equity shareholders entitled to vote is March 20.
Source: Stocks-Markets-Economic Times
