Norway's Norges Bank Investment Management and South India-based Portfolio Management Service (PMS) are likely to raise their voices in opposition to the proposed delisting of ICICI Securities, citing growing concerns over the company's undervaluation, according to a Moneycontrol report. This development has thrown a spotlight on the ongoing saga surrounding one of India's leading brokerage firms.

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Here is a comprehensive timeline of events leading up to this critical juncture:

June 29, 2023: The delisting announcement

ICICI Securities announced its intention to delist and become a wholly-owned subsidiary of its parent company, ICICI Bank. Under this proposal, public shareholders of the broking firm would be allocated 67 equity shares of ICICI Bank for every 100 equity shares of ICICI Securities. This decision marks the end of ICICI Securities' five-year run as a separately listed company.

At the time of the announcement, ICICI Securities' stock price had been hovering just above its initial public offering (IPO) issue price of 520 rupees, igniting debates about the stock's true value.

July 2023: ICICI Bank's buyback plan details

ICICI Bank unveiled its strategy to acquire a 25.15 percent stake in ICICI Securities. The bank plans to achieve this by allotting 67 shares of its own stock for every 100 shares of ICICI Securities held by the public. This move, detailed in a regulatory filing, would effectively cancel out ICICI Securities' shares, leading to full ownership by ICICI Bank.

Both ICICI Bank and ICICI Securities' boards show unanimous approval of the proposal, emphasising the anticipated synergies resulting from this merger. However, several key approvals remain pending, including those from shareholders, creditors, the Reserve Bank of India, the National Company Law Tribunal, and various stock exchanges.

August 2023: Valuation concerns grow louder

As the proposal progresses, concerns over the valuation of ICICI Securities intensify. Shareholders, analysts, and market experts express doubts about the fairness of the deal, considering the low stock price relative to the company's potential.

September 2023: Norges Bank and South India-based PMS enter the fray

Norway's Norges Bank Investment Management's Government Pension Fund Global, holding a significant 3.13 percent stake in ICICI Securities, is poised to vote against the delisting proposal. Simultaneously, South India-based Portfolio Management Service, which also commands approximately 3 percent of ICICI Securities, aligns itself against the delisting, according to the Moneycontrol report.

Despite holding shares on behalf of clients, the PMS retains the power of attorney to exercise voting rights,

These developments, as reported by Moneycontrol, indicate a growing clamour among investors and stakeholders who believe that ICICI Securities is undervalued and ripe for a re-rating.

Future outlook: Regulatory hurdles and investor sentiment

The fate of ICICI Securities' delisting now hangs in the balance, with significant hurdles remaining on the regulatory front. Shareholders' votes, regulatory approvals, and a thorough evaluation of the company's valuation will shape the path forward.

ICICI Bank maintained that no additional capital infusion will be necessary, as ICICI Securities is viewed as a low capital-consuming business with ample internal resources for growth. As of March 31, 2023, ICICI Bank already holds 74.85 percent of ICICI Securities' equity shares, with the remaining 25.15 percent owned by the public. The delisting proposal envisions both entities capitalising on synergies, aligning with ICICI Bank's customer-centric strategy.

First Published:Sept 7, 2023 12:54 PM IST