ICICI Bank approves proposal to divest 19% stake in ICICI Merchant Services

ICICI Bank Limited’s Board of Directors, during its meeting held today, approved the proposal to divest a 19 percent stake in ICICI Merchant Services Private Limited (IMSPL), a company in which the bank currently holds an associate status. 

The sale is projected to generate proceeds in the range of ₹160 to ₹190 crore, the company said. This financial inflow will bolster ICICI Bank’s strategic objectives and streamline its investment portfolio by reallocating resources.

Upon completion of the transaction, IMSPL will no longer be classified as an associate entity of ICICI Bank, the lender said in its exchange filing. The sale is contingent on receiving the necessary regulatory and statutory approvals.

The formal agreement to finalize the stake sale is expected to be executed before June 30, 2025. ICICI Bank has outlined that the sale process, including any necessary regulatory and statutory approvals, is anticipated to conclude by the same date, it added.

As per the filing, during the financial year ending March 31, 2024, IMSPL reported a revenue from operations amounting to ₹475 crore, reflecting its substantial role within the bank's broader operations. The company's financial contribution is further emphasized by ICICI Bank’s net worth, which stood at ₹645 crore as of the same date.

Strategic Implications

This divestment aligns with ICICI Bank's ongoing efforts to optimize its operations and focus on core business areas. While IMSPL’s contribution to ICICI Bank’s overall revenue and net worth has been noteworthy, the sale reflects the bank’s strategic vision of reshaping its asset base to enhance long-term growth and profitability.

The decision to divest IMSPL underscores ICICI Bank's commitment to realigning its portfolio and exploring opportunities to maximize shareholder value. With the process expected to conclude by mid-2025, the bank is poised to reinforce its focus on core financial services while maintaining its competitive edge in the market.

Stock Price Trend

The stock was trading 0.8 percent higher at ₹1,340.40 around 2:00 pm. Post the announcement, the stock rose 2 percent from its intra-day low of ₹1,313.55.

The banking stock has risen 31 percent in the last 1 year and around 35 percent in 2024 YTD. It added 3 percent in December so far, extending gains for the seventh straight month.