Infosys chief steps down, board approves Rs130b buyback
NEW DELHI India’s second largest software services firm Infosys on Saturday said its board has approved a share buyback offer of up to Rs13,000 crore (Rs130 billion).
The buyback price of Rs1,150 per share is nearly 25 per cent higher than Friday’s closing of Rs923.10 apiece.
The company has also set up seven-member committee comprising key members like Co-chairman Ravi Venkatesan, Executive Vice-chairman Vishal Sikka, interim CEO and MD UB Pravin Rao, among others to oversee the process of the buyback offer.
The buyback offer approved by the board will comprise up to 11.3 crore equity shares or 4.92 per cent paid-up equity share capital, Infosys said in a regulatory filing.
The development comes a day after Vishal Sikka quit as Infosys’ CEO amid founders alleging corporate governance lapses. The board had blamed a “misguided” campaign by co- founder NR Narayana Murthy for Sikka’s resignation.
The process timeline and other details will be announced in due course, Infosys said, adding that the buyback is subject to approval of the shareholders by way of a special resolution.
Shareholders in the US
The company said given the significant shareholding of the US residents by way of ADS’ and equity shares, it was necessary to obtain exemptive relief from the American market regulator US SEC on certain aspects of the tender offer procedures.
This is due to conflicting regulatory requirements between Indian and US laws for tender offer buybacks and the same has been obtained, Infosys explained.
The Bengaluru-based company in April had announced that it will pay up to Rs13,000 crore (Rs130 billion) to shareholders during the current financial year through dividend and/or share buyback.
Share buybacks typically improve earnings per share and return surplus cash to shareholders, while also supporting share price during period of sluggish market condition.
Infosys had cash and cash equivalents worth over $3.5 billion on its books as of June 30, 2017.
The buyback offer size is 20.51 per cent of the total paid-up equity capital and free reserves of the company as on June 30, 2017, Infosys said.
The buyback Committee also includes CFO MD Ranganath, Jayesh Sanghrajka (Deputy CFO), Inderpreet Sawhney (General Counsel) and A G S Manikantha (Company Secretary).
A number of tech companies have announced share buyback programmes this year to offer rich returns to shareholders.
While Infosys larger rival TCS offered Rs 16,000-crore (Rs160 billion) mega buyback offer to shareholders, rivals like Cognizant, Wipro, HCL Technologies and Mindtree have also made similar announcements.
Sikka resigns
Meanwhile, Sikka, 50, a former German IT major SAP executive under whose three-year tenure Infosys’ revenue rose by about 25 per cent, said he faced “false, baseless, malicious and increasingly personal attacks.”
Infosys board in an unusually strong statement defended Sikka’s performance and ruled out a formal role for Murthy in the company’s governance.
In February last year, Sikka’s term was mid-way extended by two more years till 2021 largely because of his performance.
In marathon investor calls and media briefing, Infosys Chairman R Seshasayee said anonymous complaints of alleged misdeeds in acquisition of Israeli firm Panaya are being repeated over and over again despite two independent probes not finding any wrongdoings. He countered Murthy’s assertion that the “whistle-blower complaint” was probed by a set of lawyers hired by a set of accused and such a report gave clean chit to the accused.