Infy promoters’ stake up at 13% after buyback

Sharholders tender 565 million shares, five times the 113-million target

Infosys has seen the stakes of its promoters rise to 12.9 per cent after a ~13,000-crore share buyback.

The combined stakes of all promoters in Infosys before the buyback offer was 12.75 per cent, indicating the proportion of shares tendered by the promoters was less than that tendered by other shareholders. Infosys received applications tendering over 565 million shares, five times the 113 million shares that were proposed to be bought back.

The company had said it would spend ~13,000 crore in buying back 4.92 per cent of its paid-up equity share capital at a price of ~1,150 apiece.

Among the three largest Indian IT services firms, Infosys was the last to announce its plan to return cash to investors through a buyback. Rival Wipro had announced a ~11,000 crore share buyback plan in July, while TCS had announced a ~16,000 crore buyback plan in February. The response to Wipro’s buyback offer was 3.41 times (~37,500 crore), while for TCS it was 2.2 times (~35,200 crore). In February, American IT services giant Cognizant announced a $3.4 billion buyback after coming under pressure from activist shareholder Elliott Management.

In its disclosure to the US Securities and Exchange Commission, Infosys said it had purchased 1.5 million shares from Sudha Gopalakrishnan worth ~172.5 crore and 1.39 million shares from Rohan Murty worth ~160.16 crore.

Other promoters have collectively tendered 8.23 million shares worth ~946 crore. Prior to the buyback offer the promoters held 292.81 million shares and their collective holding afterwards was 281.7 million shares, a decline of 11.1 million shares, worth ~1,277 crore.

Life Insurance Corporation of India sold 6.11 million Infosys shares, or 5.4 per cent of the total shares proposed to be bought back. It was followed by the Singapore government, which sold 2.47 million shares, and Copthall Mauritius Investment, which sold 1.75 million shares. Franklin Templeton Investment Funds, Vanguard Emerging Markets Stock Index Fund Aserie, HDFC Standard Life and ICICI Prudential Life were the other major sellers.

Of 16.96 million shares reserved to be bought back from small shareholders, Infosys received 30.37 million shares, 180 per cent of the reserved quota.

On a standalone basis, Infosys had cash and bank balances of a little over ~19,000 crore at the end of March. It distributed ~5,915 crore as dividend from the ~13,818 crore it clocked in net profit in 2016-17. In addition, the company’s investments in bonds and unquoted units were about ~9,600 crore at the end of March.