MUMBAI: ICICI Bank is planning to delist shares of its broking subsidiary ICICI Securities from stock exchanges.
The delisting will be done through a share swap instead of cash payout and the shareholders of ICICI Securities will get shares of the country’s second-largest private lender. The swap ratio will be announced after the board meetings on June 29 where both companies will consider the delisting proposal
“The entire process of delisting is expected to take around two or three quarters because both companies will have to get the nod of at least two-thirds of their shareholders. The intention of the management is to complete the delisting before the end of this year,” a source told this newspaper.
Both entities informed stock exchanges about the delisting proposal in a regulatory filing on Monday. ICICI Securities listed its shares on the stock exchanges in 2018 and is now among the top largest stock brokers in the country. The decision to delist has surprised the market but the company believes that it would usher in new era growth. After delisting, the management can focus on long-term growth and innovation.
“Currently, there is pressure to perform every quarter and the company is evaluated from one quarter to another. So, there is less space to focus on long-term growth and innovation,” said the source. One of the reasons for listing the brokerage firm was that its parent ICICI Bank needed capital at that time. Also, the lender wanted its subsidiary to meet its capital need on its own and raise growth capital. Now this cash-rich brokerage firm does not need to raise more capital from the market.
“We have realised that our business is not capital intensive so there is no need to raise funds now. We are now giving funds back to our parent company which is evident from our dividend payouts,” said the source.