Private lender ICICI Bank Ltd announced on Friday that it had sold 6.44 million shares or 2% of the capital of its brokerage arm ICICI Securities Ltd for ₹310 crore.
Selling on the open market comes at a time when business is booming for brokerage firms given the scramble for new retail entrants after the market has recovered strongly since March.
ICICI Securities shares closed at ₹492, more ₹1.05 or 0.21% on BSE.
The bank sold these shares as part of its efforts to increase the public stake in ICICI Securities to 25%, the minimum required for all listed companies. After the sale, ICICI Bank still holds 77.22% of the capital of the subsidiary.
“To take a step towards compliance by ICICI Securities Ltd with the minimum public participation requirements… ICICI Bank Ltd, the promoter of the company, today sold 6,442,000 shares of the par value of ₹5 each of the company, representing 2% of the company’s share capital as of June 30, 2020 ”, indicates a press release from Banque ICICI on the stock exchanges.
ICICI Securities shares have jumped 84% from their March low, gaining 22.62% this year so far. Parent bank ICICI Bank also jumped 89% from its March low, but is down 24% in 2020 so far.
However, the ICICI Securities share is below its issue price of ₹520 when it debuted on the stock markets in April 2018.
As retail investors flocked to equities to profit from the market crash in March, average daily spot trading volumes increased in the June quarter, boosting brokerage firm revenues and profits.
At ICICI Securities, profit before tax increased 47% year-over-year (year-on-year) to ₹260 crore in the June quarter.
In equities, ICICI Securities recorded a 90% year-over-year increase in the number of clients trading daily.
Strong growth in brokerage business was partially offset by subdued distribution performance as investment banking revenues grew 34% year-on-year and more than doubled sequentially over the period.