India’s second largest IT company Infosys today said its Rs 13,000-crore buyback offer will open on November 30. The company would buy back 11.3 crore of its equity shares of Rs 5 face value by paying Rs 13,000 crore at the price of Rs 1,150 per share. “The company has received the approval of the regulator (Securities and Exchange Board of India) on Thursday on the buyback and the offer letters will be dispatched to the shareholders by November 23,” said the filing. The last date of receipt of tender forms is December 18 and the last date of settlement of bids on the stock exchanges is December 26, and the offer closes on December 14.
The promoters, including co-founders N.R. Narayana Murthy and Nandan Nilekani have offered to sell 1.77 crore shares valued at Rs 2,038 crore in the buyback offer. According to the shareholding pattern, the promoters group, comprising co-founders and their families hold 12.92 per cent of the shares; Foreign Institutional Investors (FIIs) and Foreign Portfolio Investors (FPIs) 37.33 per cent; Indian retail, corporate and other investors 23.08 per cent; Indian FIs, Banks and Mutual Funds 9.63 per cent; American Depository Receipts 16.69 per cent; and Non-Resident Indians (NRIs) 0.52 per cent.
Share buybacks typically improve earnings per share and return surplus cash to shareholders. Earlier this year, Tata Consultancy Services (TCS) completed an Rs 16,000-crore buyback offer. Other competitors like Cognizant, Wipro and Mindtree had also made similar announcements. TCS small shareholders (who bought after the announcement of the offer) earned a 47 per cent return, while HCL Tech and Mphasis shareholders earned 35 per cent and 40 per cent respectively .So, is this the right time for the short time investors to grab the opportunity (buy Infosys)? It looks “Yes” as of now. Readers are requested to consult their investment advisor before taking any position.