Infosys' promoters mobilise Rs 5k crore from ADS issues

BANGALORE: With the “long term goal of getting into one of the big global indices,” and a short term target of making it to Nasdaq 100, Infosys Technologies, in the last four years, has gone for three secondary, sponsored ADS issues. Now, the company is within striking distance of achieving the second objective. In the process, it has also helped its promoters to liquidate their stake partly without roiling the markets.

The five founder directors of Infosys Technologies: chief mentor, NR Narayana Murthy, CEO Nandan Nilekani, COO Kris Gopalakrishnan and two directors, K Dinesh and SD Shibulal have collectively liquidated stock worth more than a billion dollars — Rs 4,936 crore to be exact. A sponsored, secondary ADS issue is essentially meant to infuse liquidity into overseas stock by converting local shares into ADS. The money raised goes to the shareholders who tender equity shares to the offer and not to the company.

The big five realised a total of Rs 335 crore after the first ADS issue in ’03. They converted Rs 1,500 crore of shares into cash through a second, such issue in May. And the current issue, will see them taking home a massive Rs 3,094 crore.
From the three issues, Mr Murhty has taken home Rs 1,516 crore. His chief lieutenant, Nandan Nilekani is richer by Rs 1,053 crore, Kris Gopalakrishnan by Rs 1024 crore, K Dinesh by Rs 668 crore and S D Shibulal by Rs 674 crore. The retired founder director, NS Raghavan’s numbers would also be in a similar range but as he is no longer with the company, a break up of his figures is not made available by Infosys.

The stated and primary objective of the secondary ADS issue is to increase the float of the Infosys stock overseas. That, the company has managed to do with some regularity. Infosys debuted on Nasdaq through an IPO in 1999. The float then was 4%.

The first issue, in retrospect, was a modest one. It offered three million shares and helped infuse liquidity by raising the float to 8%. The May ’05 issue, was more ambitious — a billion dollars in size — and helped the float rise to 14%. The November ’06 issue will result in that figure hitting 19%. A percentage that should guarantee enough liquidity to help Infosys crack the Nasdaq 100 list, which comes up for review shortly.

V Balakrishnan, CFO of Infosys says, “The sponsored secondary, ADS issues are meant to boost liquidity, improve the Infosys brand name in the US market and help it become one of the mainstream stocks in the US. Hopefully, this time we should be able to make it to Nasdaq 100.

The long term goal is to get into one of the global indices.”

Infosys founders seem not to mind their combined shareholding dwindling in the company. The five promoter-directors for example, collectively owned 23.78% of the company as on March ’02. This figure has come down to 16.98%.

They seem to believe the value to the company comes from their stewardship rather than from ownership as such. So, unlike many promoters who keep increasing their stake or are loathe to pare down the existing holding, Narayana Murthy & Co seem to believe in selling a bit periodically to infuse some diversity into their individual portfolios.