LIC Concerned, Open to Raising ‘Relevant Issues’ with Board
New Delhi: Life Insurance Corporation, the second-largest stakeholder in software major Infosys, seems open to raising “relevant issues” with the existing board in the event of a showdown between the management and the founding partners of the IT firm.
“We are concerned about what is happening in the company. The promoters have not approached us so far. If they do, we will assess the situation and take up relevant issues with the existing board,” a senior LIC official said, adding the insurers’ main concern is the public investment in the firm.
According to industry observers, a more sympathetic LIC can exert more pressure on the existing Infosys board by making the members heed to the suggestions made by the promoters, which may also include bringing in new people in the top management.
The backing of the country's largest domestic investor, it is felt in industry circles, would bring balance to the ongoing tussle when other investors such as OppenheimerFunds have supported the existing management. Existing investors feel the founders need to accept that the IT firm was publicly listed and no longer “their (promoters')” company. OppenheimerFunds holds about 2.7% stake in the company, while the promoter and promoter group holding in the firm is at 12.75%.
On Saturday, LIC informed the stock exchanges it has acquired an additional 2% stake in Infosys over three years ending February, taking its total shareholding in the firm to 7.02%. “We are willing to hear out everyone, but please appreciate there is substantial public money invested,” the LIC official said, indicating this time LIC may not remain indifferent as it did during the tussle between Ratan Tata and Cyrus Mistry. “Our primary aim is to protect our investments and, as a government-owned firm, we also have a larger role,” the official said.
Infosys founder NR Narayana Murthy had, in an interview with ET, bemoaned what he described as a “concerning drop” in corporate governance at the company. There are reports that other cofounders Nandan Nilekani and S Gopalakrishnan have also raised concerns on corporate governance. However, the Infosys board is seen fully supportive of the existing management. Kiran Mazumdar-Shaw, an independent director on board, who is also the founder of biotechnology major Biocon, had said that, “Just because a suggestion comes from the promoter group, there is no obligation for us to do things that way… We are not going to simply do things because they (promoters) are asking us.”
She had further noted that the board would seriously consider suggestions that were “right for the organisation.”