What’s vexing ICICI Securities’ minority shareholders?

livemint.com:

MUMBAI : Mumbai: Minority shareholders of ICICI Securities Ltd are questioning the rationale and intent of mutual funds that bought shares of the brokerage firm in February at a premium only to vote in favour of delisting the company shortly after. By buying the shares at a premium, and then voting for the delisting to get ICICI Bank shares in exchange, the funds hurt the interests of their unit holders, say the minority shareholders.

The buying of ICICI Securities shares at a premium also gave a false impression that they expected the delisting to fail and the brokerage’s share price to rise, the investors said. Fifteen asset management companies had bought shares of ICICI Securities in February and then voted in favour of the delisting, show data from public disclosures.

Of these, relatively significant buyers were UTI Banking and Financial Services Fund, UTI Balanced Advantage Fund, and Axis Quant Fund, which bought more than 450,000 shares of ICICI Securities in February. These companies were previously not invested in the brokerage.

Kotak Mutual Fund and ITI Mutual Fund too bought ICICI Securities shares at a premium in February, but they voted against the delisting proposal in March. “What was the rationale for the mutual funds to buy the ICICI Securities shares at a premium if they knew they were going to vote in favour of delisting the company?" said Manu Rishi Guptha, a Bangalore-based fund manager and a minority shareholder in ICICI Securities.

Guptha is leading a group of over 100 shareholders of ICICI Securities who last week filed a class action suit with the National Company Law Tribunal against ICICI Bank Ltd’s proposal to delist ICICI Securities from the stock exchanges. The minority shareholders are also