Software leader Infosys Technologies on Tuesday priced the conversion of Indian shares into American Depositary Shares (ADS) worth about $1.6 billion in a sponsored offer at $53.5 per ADS, giving its founder-chairman NR Narayana Murthy and other top company directors, who participated in the issue, a fresh round of fortunes.
The 30 million American shares on offer were priced at $53.50 each, a 3.2 per cent discount to Monday's closing price of $55.27, but 3.6 per cent above their close on November 6 before shareholders approved the swap, which is aimed at increasing the share of floating shares of the company in the US. This would enable it to enter the Nasdaq exchange’s index of 100 shares.
Infosys shares closed and little changed at Rs 2,256 ($49.8) on the National Stock Exchange. Indian shareholders find it profitable to part with their shares under the sponsored ADS offer as the American shares command a premium over their Indian equivalents.
Company sources said Murthy, Managing Director Nandan Nilekani, board member TV Mohandas Pai and five others have collectively offered 1.3 crore shares amounting to a little over two per cent stake of their holding in Infosys in the company’s third sponsored ADR issue.
That, at the offer price, translates to nearly $700 million, if their offers are fully accepted. Valid offers have been received for 8.4 crore shares through the sponsored offer for conversion of domestic shares into American ones.
A maximum of three crore shares will be accepted. If the acceptance is in proportion to the offers received, the top five directors will net about $250 million between them.
Murthy who has offered 40 lakh shares, could get up to $214 million if all his shares are accepted, while Nilekani (27.9 lakh shares) and Chief Operating Officer S Gopalakrishnan (27.1 lakh shares) could get up to $150 million each from the issue.
Following them are promoter-directors Mr K Dinesh and SD Shibulal who have offered 16.4 lakh shares and 17.8 lakh shares, respectively.
As part of the offering, five million ADSs representing equal number of equity shares will be placed with Japanese investors through a Public Offer without Listing (POWL).
On November 17, the Indian Invitation to Offer concluded, with 3,477 valid offers for 84 million, or 8.4 crore, equity shares being offered for sale in the sponsored secondary ADS offering, of which 3 crore would be accepted. Unsold shares will be returned.
Infosys got shareholder approval for the ADS on November 7. Moving the resolution at the at the company's extraordinary general meeting (EGM), Mr Murthy had said that the company’s ADS float would rise to 19 percent from the current 14 percent of the total stock of 556 million equity shares after the issue.
The issue will increase the float to 107 million ADSs from 77 million ADSs now. The previous ADS offerings were made in 2003 and 2005 respectively.