Ambiguity over Wipro public issue cleared

A mega public issue from infotech bellwether Wipro is most likely within the next couple of years. Putting to rest prolonged speculation, a top official from the capital market regulator the Securities and Exchange Board of India (Sebi) said, "Since Wipro was listed before the 10 per cent listing rules came into effect, it will now have to up its public shareholding to 25 per cent within the next two years." A Wipro spokesperson, however, declined to comment on the issue.

Wipro chief Azim Premji, an infotech Czar, will have to bring down his holding in the company to 75 per cent within the next two years. Currently (June 30, 2005), the promoters own 82.37 per cent stake.

Public shareholders including the domestic and the foreign institutions, apart from other corporate bodies, hold 17.63 per cent in the company. This includes the American Depository Receipts (ADRs), which account for a minuscule 1.46 per cent.

Premji, thus, will have to offload 7.37 per cent or Rs 4,160 crore of his share within the next two years to comply with the new regulations. As on Monday, the market capitalisation of Wipro stood at Rs 56,449 crore, while on Tuesday its stock closed at Rs 400.35.

Until now, it was ambiguous whether the infotech major, which ranks eighth in terms of market cap, would have to comply with the recently announced Sebi regulations that require all listed companies to bring down their promoters' holdings to 75 per cent within the next two years.

Considering the humungous size of Wipro, market participants were expecting that Wipro would be exempted from the new regulations. "Wipro officials have still not approached the Sebi for any clarification or exemption or extension of the compliance date," said the Sebi official.

Before the Sebi ruling, listed companies were governed by different rules depending on the time of their listing.

At present, there are two categories of companies - one with a minimum 25 per cent public holding and the other with 10 per cent. IT companies such as Tata Consultancy Services fall under the minimum 10 per cent public share holding as was required during the time of their listing.

Now, these companies, too, will have to increase their public holding to the stipulated 25 per cent, though the timeframe for this is yet to be notified.