Infosys overseas float to increase stock at Nasdaq

Infosys overseas float to increase stock at Nasdaq

Monday, 08 November 2004, 08:00 Hrs
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BANGALORE: A secondary overseas float of 16 million equity shares by Infosys Technologies announced Monday will increase the company's stock of American Depository Shares (ADS) by six percent on the Nasdaq Stock Exchange.

"Out of 267.8 million shares we have in the secondary market, 21.2 million shares are listed on the Nasdaq, constituting 7.9 per cent of the total stock," an Infosys official said after the company's board meeting here.

"This secondary offering of 16 million shares will increase our stock liquidity on the Nasdaq by six percent to 13.9 percent with 16 million additional ADS," the official told IANS. Each ordinary equity share represents two ADS.

There is no addition to the paid-up capital of the company since the shares in the overseas market are being offered from the existing stock of equity, the company said.

The blue-chip information technology major's ADS was trading at $66.75 at the closing bell on the Nasdaq on Nov 5 - the last day of trading prior to the company's announcement of its secondary offering.

Earlier Monday, the company's board of directors approved the secondary ADS offering against 16 million equity shares held by its Indian shareholders.

In a notification to stock exchanges, the company said the board had also decided to convene an extraordinary general meeting of shareholders on Dec 18 to seek their approval for the secondary floatation.

"The offering will consist of a maximum of 16 million equity shares, including a green-shoe, if any, as decided by the company and managing underwriters of the sponsored ADS," the notification said.

The company will inform the shareholders the specified date for eligibility to tender their equity shares in the offering on a pari-passu basis, the company added.

The underwriters to the offering will now determine the price of the ADS being sold. The proceeds will be proportionately paid to the shareholders who offer their shares after meeting the offering expenses.

The proceeds will be deposited in an escrow account, to be opened by the company for the offering.

"After the extraordinary general meeting, the company will hold road shows in January and February and the price will be fixed in mid-March in consultation with the lead managers," an Infosys official disclosed.

The underwriters will decide the offer price, based on the book value and the price of the existing ADSs being quoted on the Nasdaq, where it was listed in March 1999 after raising $60 million by floating 1.03 million ADS.

The company plans to complete the entire exercise by the end of the current fiscal year ending March 31, 2004.

This will be the second time Infosys is sponsoring shares overseas to increase its liquidity on the Nasdaq, where its scrip is trading at a premium of some 55 percent over the equity shares on the Indian bourses.

After an initial public offer in 1999, Infosys made a secondary offer of three million equity shares in July 2003 for issuing six million ADS at a price of $49, increasing its liquidity by 4.9 percent to 7.9 per cent.

After the latest bonus issue of three equity shares for every one share to Indian shareholders in April, the company has 246.60 outstanding shares listed on domestic bourses for trading in the secondary market.

In view of a bonus offer of two shares for every one share to its overseas investors, the present secondary offering of 16 million equity shares is equivalent to 16 million ADS.

Out of the current 21.2 million ADS listed on the Nasdaq, financial institutions and retail brokers hold 14.25 million shares, while the balance 6.40 million are under an employee stock option scheme for the staff worldwide.

Similarly, out of the total 246.60 million shares on domestic bourses, foreign institutional investors hold 40.5 percent, promoters 21.98 percent and public 20.77 percent.

Non-residents, overseas corporate bodies, financial institutions, mutual funds, private companies and trusts hold the balance 16.75 percent.
Source: IANS
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