Quantum MF cries foul on ICICI Securities delisting, complains to Sebi

livemint.com:

MUMBAI : In a rare instance of investor activism by an asset management company, Quantum Mutual Fund has written to the markets regulator objecting to the delisting of ICICI Securities Ltd on grounds of unfair valuation for the brokerage’s minority shareholders. The asset management company, in a letter to the Securities and Exchange Board of India (Sebi), also objected to employees of ICICI Bank Ltd allegedly reaching out to ICICI Securities shareholders urging them to vote in favour of the delisting, which sailed through despite opposition from some investors. ICICI Securities last month held a shareholder vote on the proposal to delist the company from the bourses and make it a 100% subsidiary of parent ICICI Bank.

Presently, ICICI Bank holds 74.77% of the brokerage. The resolution got shareholder nod with just under 72% of the votes cast in favour of the delisting against a minimum requirement of 66.7% favourable votes. Shareholders will now get 67 shares of ICICI Bank for every 100 ICICI Securities shares they hold.

In its letter, Quantum said that the swap ratio assigns a valuation to ICICI Securities that is at a discount of 30-77% to its listed peers. This will result in a loss of ₹6.1 crore to the unit holders of Quantum Mutual Fund and a loss of about ₹1,777 crore to all minority shareholders of ICICI Securities, Quantum alleged in its letter, which is addressed also to ICICI Bank and ICICI Securities. Quantum Mutual Fund holds about 0.09% in ICICI Securities through Quantum Long Term Equity Fund and Quantum ELSS Tax Saver Fund.