Fresh Infosys float in US

Board meets on Monday to consider second sponsored ADS issue.

Infosys Technologies has announced that it plans to consider a sponsored secondary American depository shares (ADS) offering at its board meeting on Monday. The company plans to sponsor this ADS issue against the existing equity shares in the company.

This indicates that Infosys is looking to further increase its stock float in the US market. As part of the bargain, Indian shareholders are likely to be offered a premium for parting with their shares. The size of the US float will be determined only after the board meeting and an approval from the shareholders.

Prior to the first sponsored ADS issue, the company's exposure in the US markets was 3.27 per cent of its equity capital. Following the issue, it increased to 7.9 per cent.

In the previous sponsored ADS issue, Infosys had approved the sponsorship of an American depository receipt (ADR) issue of 2-3 million shares, which was equivalent to 4 -6 million ADS.

This issue was oversubscribed, with nearly 200 investors showing interest in the offering from across the US, Europe and the Far East. The issue helped the company infuse 5.218 million ADS in the US markets, thus increasing its liquidity there.

Nearly 77 per cent of the Indian shareholders had tendered their shares for the first sponsored ADS programme. The company received 14.8 million shares from 10,164 shareholders, much higher than the requirement of 3 million equity shares.

Besides institutional and retail segments, sellers included Infosys' promoters, directors, and those who own 5 per cent or more of the equity shares.

After the offer, the promoters' holding in the company was reduced to 22.8 per cent from 23.9 per cent as they offered to sell nearly 900,000 equity shares (or 1.8 million ADS).

Emerging Markets Growth Fund Inc, the other major promoter of Infosys, offered nearly 230,000 million equity shares or 460,000 ADS, which reduced its stake from 5.6 per cent to 5.3 per cent.

Other major promoters that had opted for the offering included Merril Lynch Capital Markets Espana, which offered 150,000 equity shares (or 300,000 ADS), thereby reducing its stake from 4.2 per cent to 4 per cent. Morgan Stanley Dean Witter Mauritius Company Ltd offered nearly 160,000 equity shares or 320,000 ADS, thereby reducing its stake from 4 per cent to 3.8 per cent.

Individual shareholders, who own less than 1 per cent of the equity, had offered to sell nearly 1 million equity shares (2 million ADS), reducing their stake from 27.6 per cent to 26.2 per cent. As a result of the first offer, the Indian stock market was left with 66.3 million outstanding equity shares.

For the quarter ended September 30, 2004, Infosys' cash and cash equivalents, including investments in mutual funds, increased by Rs 350.05 crore during the quarter to touch Rs 2,502.07 crore. This is despite the capital expenditure made by the company during the second quarter.