19 August 2017 12:40:21 IST

Infosys to buy back 11.3 crore shares at ₹1,150 each

The offer size is 20.51 per cent of the total paid-up capital and free reserves

Global software major Infosys Ltd announced on Saturday that it would buy back 11.3 crore shares of ₹5 face value at ₹1,150 each via a tender offer.

“The Board has approved a proposal to buy back 11.3 crore equity shares of ₹5 face value from the shareholders at a price of ₹1,150 per share for an amount not exceeding ₹13,000 crore ($2 billion),” said the IT major in a regulatory filing on the Bombay Stock Exchange (BSE).

The offer size is 20.51 per cent of the total paid-up capital and free reserves, aggregating up to 11.3 crore shares or 4.92 per cent of the equity shares.

The buyback decision came a day after the company’s Chief Executive Officer (CEO) Vishal Sikka resigned and was appointed Executive Vice-Chairman till a new CEO takes charge by March 31, 2018.

The offer price at ₹1,150 per share is ₹226.90 more than ₹923.10 per share closing price on Friday when it plunged 9.6 per cent after Sikka’s resignation spooked investors and is at around 18 per cent premium of the August 16 closing price.

The company closed the trading window on August 16 in view of the Board meeting on the share buyback and will reopen on August 22.

The buyback offer does not include costs like securities transaction tax, GST, stamp duty, filing fees, advisors fees, brokerage, public announcement expenses, printing and dispatch expenses and other expenses.

The buyback price also represents a premium of 19 per cent of the weighted average market price during the last three months.

“The buyback is subject to approval of the shareholders by way of a special resolution through postal ballot and its record date will be decided soon,” added the filing.

The Board has formed a Buyback Committee comprising Co-Chairman Ravi Venkatesan, Vishal Sikka, Interim CEO U.B. Pravin Rao, Chief Financial Officer (CFO) M.D. Ranganath, Deputy CFO Jayesh Sanghrajka, General Counsel Inderpreet Sawhney and Company Secretary A.G.S. Manikantha.

According to the company’s shareholding pattern as on August 16, the promoters group, comprising co-founders and their families hold 12.92 per cent of the equity shares, Foreign Institutional Investors (FIIs) & Foreign Portfolio Investors (FPIs) 37.33 per cent, Indian retail, corporate and other investors 23.08 per cent, Indian FIs, Banks and Mutual Funds 9.63 per cent, American Depository Receipts (ADRs) 16.69 per cent, and Non-Resident Indians (NRIs) 0.52 per cent.

Infosys buyback comes a month after Wipro announced on July 20 its decision to buy back 34.3 crore equity shares of ₹2 each for ₹11,000 crore ($1.7 billion) at ₹320 per share.

Indian IT bellwether Tata Consulting Services (TCS) completed buyback of its 5.6 crore equity shares of ₹1 each on May 31 at ₹2,850 per share, with the attractive offer oversubscribed by 221 per cent or 12.4 crore shares.

The country’s fourth-largest software services firm HCL Technologies completed buyback of 3.5 crore equity shares of ₹2 face value at ₹1,000 per share on June 23.