Another Indian financial institution is tidying up. The $80 billion ICICI Bank is weighing up a delisting of its broking firm ICICI Securities , the news prompted a 10% rally in the shares of the $2.4 billion unit. This time the country’s second largest private sector lender is dealmaking from a position of strength.
, the news prompted a 10% rally in the shares of the $2.4 billion unit. This time the country’s second largest private sector lender is dealmaking from a position of strength.
The stockbroker was listed five years ago during the peak of a bad debt crisis. It was one among a flurry of subsidiary IPOs that battered lenders including State Bank of India undertook to generate cash. ICICI Bank was particularly vulnerable, with then CEO Chanda Kochhar battling allegations of dodgy lending to the Videocon group. She’s since left and is facing charges from the country’s central investigative agencies.16% on debut; it has since grossly underperformed its parent, delivering total returns of 122%, against 238% for ICICI Bank, whose value has nearly quadrupled partly thanks to a turnaround under boss Sandeep Bakhshi.
After Monday’s share price jump, it will cost about $610 million for the lender to buy the 25% it doesn’t already own. ICICI Securities trades at roughly 18 times trailing earnings but went public at more than twice that valuation, Centrum Broking calculated at the time. That makes it a small price to pay to unwind what was a desperate deal.
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