Investors rue missing Infy goldmine

YP Rajesh

BANGALORE: Every time shares of Infosys Technologies Ltd. go up in the

market, Ramesh Basappa feels depressed. He is not competing with the Indian

software leader. He is one of those who missed making millions on it. There are

dozens like him in Bangalore, India's technology capital, who rue the day they

mistook riches for ruin.

When Infosys went public in 1993, it offered the engineer and his colleagues

500 shares each at a preferential price of Rs 80 ($1.75) per share. The share

price closed at Rs 7,826.10 on Wednesday.

Basappa, who works for a state-run company, did not buy the Infosys story

when it went public. India's stock markets were then just recovering from a

securities scandal that ruined many.

"At current share prices, the investment of Rs 40,000 would have

multiplied to Rs 64 million if you account for three bonus issues and one

stock-split," Basappa says. He quickly ends the conversation: "Okay,

let's not talk about it any more and ruin my day."

Infosys last year became the first Indian company to be quoted on the Nasdaq.

Its chairman, N R Narayana Murthy, is known for his simple lifestyle,

no-nonsense talking and the dozens of millionaires he has spawned.

Infosys' revenues have grown at an annual clip of 85 per cent since 1994,

when it began seeing the heady fruits of a small business begun in 1981, when

India's economy was in socialist shackles, and the software industry a global

toddler.

Share prices have far outpaced revenue growth. Offered at an IPO price of Rs

95 per share to the public and Rs 80 to preferred investors, the value has

multiplied between 85 and 100 times in seven years.

Stories, many of them unconfirmed, abound of the difficulty Infosys' founders

faced to sell their IPO.

It seems an Infosys official flew to Mumbai to get a friend's signature on an

application for 1,000 shares. He refused.

Things have come a long way. There are stories now of some buying one Infosys

share as a birthday gifts for their wives.

R Sridhar, a top gun in advertising who helped the Infosys IPO, is now richer

- and smug - with the preferential shares he got. "There are two kinds of

investors in Bangalore," he says. "Those who bought the Infosys story

and those who didn't."

"Investors had very little understanding of technology companies or

their future," an analyst told Reuters. Infosys went public within months

of India abolishing a tough Finance Ministry office that fixed IPO prices and

controlled share issues.

"People were not sure if the values sought by companies were worth their

money," the analyst said. "And then, we had just recovered from the

securities scam... "So now it's one of those things that might have

been."

(C) Reuters Limited 2000.