Citing irregularities, Quantum Mutual Fund (MF) has initiated steps to stall the delisting of ICICI Securities. The asset supervisor has shot a letter to guardian ICICI Financial institution and market regulator Securities and Alternate Board of India (Sebi) stating that the delisting is towards the curiosity of minority shareholders.

It has requested ICICI Financial institution to “chorus from taking any additional steps or do any act in the direction of implementation of the scheme of merger..failing which we’ll undertake applicable authorized proceedings together with submitting purposes earlier than the NCLT and different regulatory our bodies.”

Final month, the delisting bid was authorised by shareholders of each ICICI Financial institution and ICICI Securities. The Mumbai-based brokerage and funding banking agency had secured practically 72 per cent of the minority shareholders’ vote in favour of the delisting, surpassing the required majority of two-third votes wanted to cross a decision underneath the delisting regulation.

Quantum MF, which has solely 0.09 per cent stake in ICICI Securities, had forged an “towards” vote on the delisting resolutions.

Within the eight-page letter, the fund home has highlighted 4 “discrepancies”. These embody outdated valuation stories, fraudulent means to garner votes, battle of curiosity of impartial administrators and non-compliance of delisting rules.

“The valuation stories procured in June 29, 2023 couldn’t have been used to find out the swap ratio or made the idea of voting by the ISec shareholders in March 27, 2024, because the valuation stories fail to account for the varied dynamic market adjustments that befell for the 9 month interval of June 2023 to March 2024. This resulted in offering inaccurate and unreliable valuation stories…there was no intendent software of thoughts by the service provider bankers and the equity stories didn’t deep dive into the valuation train,” the letter stated.

The letter goes on to say that the merger ratio has valued ISec shareholders at a 30 per cent to 77 per cent low cost to its listed friends primarily based on consensus earnings forecast for fiscal yr ended March 2024. Quantum MF has in contrast ISec price-to-earnings valuations to friends comparable to Angel One, 360 One and Anand Rathi Wealth.

The fund home has stated that it was shocked to be taught that the administration of ICICI Financial institution contacted retail shareholders of ISec to coax them to vote in favour of the scheme merger. “This disclosure of confidential shareholder knowledge on the a part of ISec to ICICI Financial institution reveals the mala fide conduct of ICICI which vitiates the shareholders assembly and votes.”

Quantum MF letter observes that impartial administrators of ISec maintain shares of ICICI Financial institution and have voted in favour of the scheme “regardless of the plain battle of curiosity.”            

ICICI Financial institution has used the recently-introduced rule that enables a guardian to delisting a subsidiary in the identical line of enterprise, Quantum MF has alleged non-compliance with delisting rules.

“Admittedly, ICICI Financial institution and ISec aren’t in the identical line of enterprise and delisting has been proceeded with by feigning ignorance of delisting rules.”

First Printed: Apr 13 2024 | 11:07 AM IST