ICICI Bank Faces Backlash Over Alleged Coercion In ICICI Securities Delisting Proposal

ICICI Bank is currently facing criticism from minority shareholders who are accusing the lender of pressuring them to support its proposal to delist its broking unit, ICICI Securities.

The bank, which holds a significant stake in ICICI Securities, has suggested a share-swap ratio where investors of the broking unit would receive 67 shares of the parent lender for every 100 shares they own.

However, minority shareholders are dissatisfied, alleging that the valuation falls below the fair value of ICICI Securities. Some shareholders have reported being coerced by bank executives to vote in favor of the delisting resolution.

Market observers, including Deepak Shenoy from Capital Mind, have raised concerns that such actions could invite scrutiny from the Securities and Exchange Board of India (Sebi).

"The bank has been actively reaching out to shareholders and urging them to vote in favor of the resolution. While this might be within legal bounds, it raises ethical questions, especially when seeking email confirmations of votes. Although we have a position in the bank, such tactics are concerning and could lead to regulatory action," Shenoy commented.

Chander Bhatia, another shareholder, pointed out that the proposed merger ratio values ICICI Securities at a substantial discount compared to its peers. Quantum Asset Management Company, which holds stakes in both entities, voted against the resolution on this basis.

Some investors, like Gautam Pradhan, believe that such tactics could backfire, prompting previously indifferent shareholders to vote against the resolution.

Portfolio manager Nilesh Shetty of Quantum Advisors criticized the valuation, calling it one of the cheapest seen for a delisting in India, especially for a company of ICICI Securities' caliber. Shetty also raised concerns about ICICI Bank's corporate governance in light of the transaction.

Voting on the resolution concluded on Tuesday, and the company plans to hold a virtual call to discuss the outcome today.

"I'm advising all my clients to vote against this resolution. The valuation should have been more in line with the IPO valuation six years ago," said Manu Rishi Guptha, founder of MGR Capital.