A day after Infosys CEO Vishal Sikka announced his resignation, the board of directors of the tech company on Saturday cleared a proposal to buy back shares worth Rs 13,000 crore as part of its efforts to plough back cash reserves to shareholders.
“The buyback offer of shares will comprise a purchase of up to 11,30,43,478 equity shares aggregating up to 4.92 per cent of the paid-up equity share of the company at a price of Rs 1,150 per equity share,’’ the company said in a communication issued to stock exchanges on Saturday.
The buyback price is 24 per cent above the Friday’s closing price for the company’s share of Rs 923.15. The Infosys share had fallen Rs 97.70, or 9.57 per cent, on Friday following the exit of Sikka amidst an unstable relationship between the board of directors of the company, the management and a group of founder shareholders led by chief founder of the $10 billion company, N R Narayana Murthy.
The Rs 13,000-crore buyback scheme, which will begin on a yet-to-be-announced date, will see the company plough back 20.51 per cent of its paid-up equity and free reserves of cash as on June 30, 2017 to the shareholders of the firm.
The price identified by the board of Infosys is at a premium of 17.73 per cent and 17.92 percent above the share price on the BSE and the National Stock Exchange when Infosys Ltd informed the stock exchanges on August 16 about the buyback plan. It is also 19.08 and 18.70 per cent over the volume weighted average market price of the share on the BSE and the NSE in the three months prior to the date of the announcement of the buyback.
In February 2017, amid the row between the co-founders and the board and CEO, the IT giant’s former CFO V Balakrishnan had demanded buyback of shares to protect the interest of shareholders.
Infosys will be following in the footsteps of India’s number one IT services company Tata Consultancy Services, which came out with a Rs 16000 crore share buyback in May this year.
Indian IT services companies have been under pressure to return excess cash in their books to shareholders through share buybacks.