Quantum Mutual Fund has voted against the resolution for the merger of ICICI Bank Ltd. with its subsidiary, ICICI Securities Ltd., as it could mean a loss of at least Rs 6.08 crore to its unitholders.
Earlier this month, advisory firms InGovern, SES, liAS and ISS favoured the scheme of arrangement for delisting shares of ICICI Securities and issuing equity shares of its parent company, ICICI Bank. According to the scheme of arrangement, public shareholders of ICICI Securities would get 67 equity shares for every 100 shares held.
This scheme received approval from the boards of directors of both companies and the stock exchanges. However, Quantum Mutual Fund voted against the merger.
Quantum Long-Term Equity Value Fund and Quantum ELSS Tax Saver Fund own shares of ICICI Bank and ICICI Securities. The mentioned swap price is at a discount and could lead to a loss, according to a note from the mutual fund.
The current swap ratio values the shares of ICICI Securities at a 30–77% discount to its listed peers. Even if ICICI Securities was valued at the lowest PE multiple in its peer set of Angel One Ltd., 360 One and Anand Rathi Wealth Ltd., the merger offer would be 30% higher, it said.
According to Quantum's calculations, the company has a minority shareholding of 8.15 crore and the current derived share price, based on the swap ratio, comes at Rs 722 per share. But if the ICICI Securities-derived share price is valued at 20.4 times the lowest PE multiple of its peers, then the company would make a loss of Rs 218 per share.
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