Infy shareholders okay ADR conversion plan

CIOL Bureau
New Update

BANGALORE: Shareholders of the Bangalore-based company, which became India's first firm to list on the technology-heavy Nasdaq exchange in 1999, met at an extraordinary meeting which approved the measure intended to raise the liquidity of its stock and its image in overseas markets.

"The pricing will be determined by the lead underwriters and all shareholders holding Indian equity shares will have a pari-pasu (equal degree) right to participate in the offering," Infosys said in a statement. Analysts say the issue could also boost the firm's local stock by capturing the big premium it commands overseas.

The approval enables the conversion of two to three million Indian shares of the company through an equivalent issue of four to six million American depositary receipts (ADRs), which have underlying American depositary shares (ADS). Two ADRs are equivalent to one local share.

Infosys's shares closed 0.72 percent down at 4,223.55 rupees ($88.5) at the Bombay Stock Exchange on Friday while its ADRs closed 0.76 percent at $63.72 on the Nasdaq. Shareholders approval is required under central banking regulations in India for the conversion plan, which would next need approval from the Securities and Exchange Commission in the United States.

"The aim is to make the stock a mainstream stock in the U.S. to make it a globally respected company," Nandan Nilekani, chief executive officer of Infosys, told shareholders.

Nilekani later told Reuters the timing of the issue based on roadshows would be decided later after the SEC approval, and may also depend on other factors like market conditions. Infosys ranks behind privately held Tata Consultancy Services, India's leading software service exporter, which plans to go public this year with a share issue said to be India's most eagerly awaited primary market event.

India's federal government last month approved Infosys's conversion plan that was set to boost the number of its U.S.-listed shares to between 6.27 and 7.78 percent of its capital. American shares currently account for 3.25 percent of the company's capital.

© Reuters