Infosys to buy back 11.3 crore shares at Rs1,150 each

Vishal Sikka resigned as CEO on Friday and was appointed executive vice-chairman until a new CEO takes charge by March 31, 2018

Global software major Infosys on Saturday that it would buy back 11.3 crore shares of Rs5 face value at Rs1,150 each via a tender offer.

"The board has approved a proposal to buy back 11.3 crore equity shares of Rs5 face value from the shareholders at a price of Rs1,150 per share for an amount not exceeding Rs13,000 crore [$2 billion]," the IT major said in a regulatory filing on the Bombay Stock Exchange.

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 CEO, Vishal Sikka, resigned and was appointed executive vice-chairman until a new CEO takes charge by March 31, 2018.

The offer price at Rs1,150 per share is Rs226.90 more than the Rs923.10 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, Sikka, interim CEO U.B. Pravin Rao, 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 and foreign portfolio investors hold 37.33 per cent; Indian retail, corporate and other investors hold 23.08 per cent; Indian FIs, banks and mutual funds hold 9.63 per cent; American depository receipts hold 16.69 per cent; and non-resident Indians hold 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 Rs2 each for Rs11,000 crore at Rs320 per share.

Indian IT bellwether Tata Consulting Services completed its buyback of its 5.6 crore equity shares of Rs1 each on May 31 at Rs2,850 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 its buyback of 3.5 crore equity shares of Rs2 face value at Rs1,000 per share on June 23.