ICICI Bank to buyout ICICI Sec in share swap deal

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ICC Bank He will buy my share ICICI Securities Through a stock swap deal that will delist the brokerage firm and make it a wholly owned subsidiary of the country’s second largest private bank.

ICICI Bank will issue 67 equity shares of Rs. After the transaction, the shares held by the public shareholders of ICICI Securities will be canceled and the share capital of the brokerage company will be reduced to this extent.

ICICI Securities said that while there is business synergy between the bank and the stock brokerage firm, consolidation by merger is not permitted due to regulatory restrictions on the bank from conducting stock brokerage business administratively.

the ICICI Securities’ board of directors on Thursday approved a draft plan for the delisting arrangement of equity shares in the Company and subject to the required approvals from ICICI Bank and other statutory authorities.

The transaction is expected to be completed within 12-15 months.

merger follows A similar deal proposes a merger of HDFC with HDFC Bankresulting in fewer quality companies to trade for investors.

As of the end of March, ICICI Bank owned 74.85 percent of the equity shares of ICICI Securities, while the balance of 25.15 percent was owned by the public.

Samveg Patel, associate professor at NMIMS University, said ICICI Securities shareholders are getting around Rs 1,000 more, but the installment will be adjusted in a few days and the arbitrage opportunity will be removed.

He said the proposed merger may generate synergies from cost savings and cross-selling of products.

The equity brokerage business has been under pressure since SEBI mandated upfront margin and removed the scope of leveraged trades on stock and commodities exchanges.

With shareholders in ICICI Securities facing some headwinds in terms of increasing competition in the brokerage space, the timing of turning this ailing business into a subsidiary of ICICI Bank could not be more appropriate, said Manish Chowdhury, Head of Research at StoxBox.

ICICI Securities reported that its net profit for the year ended March fell at Rs.1,118 crore as against the Rs.1,382 crore recorded in FY22 while its revenue decreased marginally at Rs.3,416 crore (Rs.3,435 crore).