ICICI Securities allots shares before March 31 deadline

ICICI Securities managed to close its initial public offering (IPO) on March 31, thereby saving billions in taxes for parent ICICI Bank. The broking firm and investment bankers handling the issue worked during the two public holidays last week in order to finish the allotment process before April 1, when the new tax on long-term capital gains (LTCG) came into effect.

According to the ‘basis of allotment’ disclosure filed by ICICI Securities, the company finalised the allotment of shares in consultation with stock exchange on March 29, and two days later allotted shares to successful bidders.

“The IPO committee of our company on March 31 has taken on record the basis of allotment of equity shares approved by the designated stock exchange, the NSE, and has allotted the equity shares to various successful bidders…The equity shares allotted to successful allottees have been uploaded on March 31, 2018 for credit into respective beneficiary accounts,” said ICICI Securities in an advertisement.

According to experts, the date of allotment was critical for the purpose of determining whether the gains made by parent ICICI Bank would be subject to capital gains tax.

ICICI Securities IPO closed on March 26. Typically, the allotment process takes five working days. However, in case of ICICI Securities there was a cloud of uncertainty on whether the allotment would be completed before March 31 due to back-to-back public holidays.

Besides saving taxes, the IPO proceeds will help ICICI Bank improve its capital standing for 2017-18. Sources, however, said the bank was in consultations with auditors on whether it could show the issue proceeds as capital gain for the January-March 2018 quarter or April-June 2018 quarter.

Through the IPO, ICICI Bank offloaded shares worth ~35-billion in ICICI Securities. The bank was looking to sell shares worth ~40 billion, but the issue failed to garner full subscription. Shares of ICICI Securities are likely to list on Thursday.