ISec proposes to delist the shares

In a surprise announcement ICICI Securities (ISec) has proposed to delist the shares.

  • ISec was listed 5 yrs back in March 2018, when like any other IPO it was being termed as value unlocking exercise by the ICICI Bank (IBank)
  • Post IPO, IBank’s shareholding had reduced to 79.22% which further reduced to 74.85% currently. Of the balance, 14% is held by the institutions and 11% by the public.

What could have led to the change in heart within 5 years – from listing to delisting?

In my personal view, the reasons could have been –

  1. Although ISec continues to be a very strong franchise, it has been facing increased competitive pressures especially from the discount brokerages like Zerodha. Consequently, it has to face increased scrutiny from investors every quarter.
  2. Given that it’s a small business relative to the whole ICICI Group, the concerns and a closer scrutiny may not be desirable from the overall ICICI brand perspective.
  3. The decision to delist could have further found support because –
    • ICICI Bank’s core operations have regained strength; and
    • RBI has once again become flexible in allowing bank’s ownership in the non-core businesses (to facilitate HDFC merger)

Personally, I see a lot of merit in this decision.

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