Infy launches $1 bn ADR offering

Infosys Technologies, India’s second-biggest software services firm, on Monday launched its $1 billion (around Rs 4,348 crore) sponsore...

Infosys Technologies, India’s second-biggest software services firm, on Monday launched its $1 billion (around Rs 4,348 crore) sponsored ADR offering, inviting local shareholders to convert as many as 16 million equity shares, or 6 per cent of its underlying shares, into American Depositary Shares.

Upon completion of the offer, Infosys’ total US float will rise to about 14 per cent of its equity capital. The company itself won’t sell any shares in the conversion but it will allow local investors capture part of the premium at which Infosys ADRs are traded on Nasdaq.

Based on Friday’s close of $62.6 per ADR, a successful offer could take the value of the deal to about $1 billion, making it the biggest conversion of Indian shares into ADRs on record. In a sponsored ADR offering, domestic shareholders sell their shares to foreign investors without any additional issue of capital. Infosys shares closed 3.7 per cent higher at Rs 2,096.85 on the BSE but they remain at a 23 per cent discount to the ADRs based on Friday’s close on Nasdaq.

The second ADR conversion will be open till May 19, and allow local shareholders to tender their holdings, which will then be converted into ADRs at a price to be determined later. “The premium reflects strong demand for Infosys ADRs, and the deal also caters to that,” said an analyst.

Earlier this year, ICICI Bank concluded a similar ADR offer by converting 44.2 million shares in a deal worth $405 million. Infosys concluded its first ADR conversion in July 2003, offering 2.6 million shares at $49 each. The ADR premiums have narrowed since the first plan, and traders expect them to shrink further as the overseas float increases.

Satyam Computer too files ADR papers

MUMBAI: Shareholders of Satyam Computer Services Ltd offered as many as 30 million shares to the company for it to convert into American depository receipts. Investors are offering 26.09 million shares, and an option for another 3.91 million for sale, the Hyderabad-based fourth largest IT firm said in a filing to the US Securities and Exchange Commission. It hasn’t disclosed what price shareholders will get for the shares. Satyam’s 30 million shares are worth about $345 million, according to ADR prices on May 6. Shares of Satyam rose 2.7 percent to Rs 425.80 on the Bombay Stock Exchange. —ENS