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Infosys takes shareholders' nod for fresh ADS issue
Tuesday, 07 November 2006, 20:30 IST
Bangalore: Infosys Technologies Ltd has secured the approval of its shareholders for a fresh sponsored American Depository Shares (ADS) issue, equivalent to 30 million equity shares traded on the Indian stock exchanges.
The resolution, moved at the company's extraordinary general meeting (EGM) here, with its board chairman N.R. Narayana Murthy in chair, enables Infosys to increase its ADS float on Nasdaq to 19 percent from 14 percent of the total stock (556 million equity shares). It also qualifies it to enter the prestigious Nasdaq 100 index.
This is the third time in as many years the company is sponsoring an ADS issue to increase its stock liquidity in the overseas market by another five percent.
The issue will increase the float to 107 million ADS' from 77 million ADS' presently. At the current market price ($51.66 per ADS) on Nasdaq, the issue commands a value of $1.55 billion.
The previous two ADS offerings were made in 2003 and 2005, with 24 million shares and 32 million shares at $12.25 and $33.5 per equity share valued at $294 million and $1.07 billion respectively.
The volume, price and value are on the basis of the stock split the company made in the last fiscal (FY 2006), making one equity share equivalent to one ADS.
"The pricing of the issue will be determined by the underwriters in accordance with the regulation. With the shareholders' approval, we will make the offer after securing the statutory clearances," Infosys Chief Financial Officer V. Balakrishnan told IANS on the sidelines of the EGM.
Allaying fears of the minority shareholders over the proposed issue, Murthy said by increasing the ADS float, the company would be able to enhance the comfort level of its overseas customers and achieve greater visibility.
"As the liquidity increases on Nasdaq, we will get more noticed by CEOs and CFOs. Their confidence will go up. This exercise will make Infosys much stronger and famous. When the CFO of a global firm notices Infosys on Nasdaq, its liquidity and market cap, their confidence in working with us increases," Murthy told reporters after the EGM.
Admitting the company's fortunes were linked to the global financial order, Murthy said such an exercise would enable the company to become a part of the global index in the near future.
"We have a good benchmark to become a part of the global index. The offering is part of our strategy to add value to the company, as 98 percent of our revenues are generated from outside the country, with 68 percent of it accounting from the US market," Murthy pointed out.
As on Sep 30, the company's market capitalisation was $26 billion or 
1,028 billion. In India, its equity shares are traded on the BSE and NSE.
A portion of the ADS'will be offered to Japanese investors through a public offer without listing (POWL).
The seven underwriters which will handle the issue are ABN Amro, Deutsche Bank, UBS, Goldman Sachs, Bank of America, Numara and JP Morgan.
Of the company's total equity shares (556 million), the foreign financial institutions (FIIs) hold 36 percent, promoters 20 percent, public 10-12 percent and the balance (32 percent) by Indian financial institutions, mutual funds and banks.
Post-issue, the FIIs holding in the company will go up to 55 percent, with 36 percent in equity shares and 19 percent in ADS.
About 140 shareholders, including 94 proxies and accounting for 199 million shares, participated in the EGM, which witnessed opposition to the resolution from a section of the minority shareholders.
Source: IANS
1,028 billion. In India, its equity shares are traded on the BSE and NSE.
A portion of the ADS'will be offered to Japanese investors through a public offer without listing (POWL).
The seven underwriters which will handle the issue are ABN Amro, Deutsche Bank, UBS, Goldman Sachs, Bank of America, Numara and JP Morgan.
Of the company's total equity shares (556 million), the foreign financial institutions (FIIs) hold 36 percent, promoters 20 percent, public 10-12 percent and the balance (32 percent) by Indian financial institutions, mutual funds and banks.
Post-issue, the FIIs holding in the company will go up to 55 percent, with 36 percent in equity shares and 19 percent in ADS.
About 140 shareholders, including 94 proxies and accounting for 199 million shares, participated in the EGM, which witnessed opposition to the resolution from a section of the minority shareholders.
Source: IANS