Former Infosys officers call for $1.8 billion buyback

Wed Aug 6, 2014 4:28pm IST

Employees of software company Infosys walk past Infosys logos at their campus in the Electronic City area in Bangalore September 4, 2012. REUTERS/Vivek Prakash/Files

Employees of software company Infosys walk past Infosys logos at their campus in the Electronic City area in Bangalore September 4, 2012.

Credit: Reuters/Vivek Prakash/Files

Related Topics

Stocks

   

REUTERS - Concerns over the pace of change at India’s second-biggest software services company have spurred three former officers of Infosys Ltd (INFY.NS) to seek 112 billion rupees ($1.83 billion) in the form of a buyback for all shareholders.

Former officers V. Balakrishnan, T.V. Mohandas Pai and D.N Prahlad are seeking 3,850 rupees a share, which is a premium of 9.6 percent over the company's closing price of 3,513 rupees on Tuesday.

Both Pai and Balakrishnan are former chief financial officers at Infosys and served as directors, while Prahlad was a senior vice president.

The demand comes at a time when Infosys is in the middle of the biggest leadership transition in its history. On Aug. 1, former SAP AG executive Vishal Sikka took charge as the first non-founder CEO at the company, while all founders, led by N.R. Narayana Murthy, either retired or took up non-executive roles with the board.

"Infosys today is seeing a major transition from a founder-driven company to a non-founder driven company...While the change is inevitable, the abrupt nature of the change raises some serious concerns not only in our minds but also with many stakeholders," the three said in the letter dated June 29.

They've also suggested Infosys should announce an ongoing buyback program to the extent of 40 percent of the previous year’s net profits on a consistent basis.

The buyback, if executed, will be the company's first since Infosys went public in 1993.

"The Infosys board and the management receives requests on a variety of subjects from shareholders and investors on an on-going basis...Should there be any development that will impact our shareholders, we will immediately inform the regulatory bodies and shareholders on priority," Infosys spokesperson Sarah Gideon said in an emailed statement.

In the letter to the board, the investors said while Infosys has close to 300 billion rupees in cash and cash equivalents, the company has not articulated its strategy for use of its cash effectively.

"Given this massive net cash position and robust net income generation, Infosys is perhaps the most over-capitalized company in the Indian corporate history, from our perspective.

"Irrespective of the liquidity Infosys may require with respect to any investment in innovation or M&A going forward, we strongly believe that the company is clearly over capitalized," the letter said.

Infosys shares were trading up 1.2 percent at 3556.15 rupees at 9.47 a.m.

(1 US dollar = 61.1525 rupees)

(Reporting by Nivedita Bhattacharjee in Mumbai; Editing by Matt Driskill)

FILED UNDER:

REUTERS SHOWCASE

Oil Prices Fall

Oil Prices Fall

Brent near four-year low after OPEC decides against output cut  Full Article 

Banking Sector

Banking Sector

India says considering plan to reduce stake to 52 pct in state banks   Full Article 

Islamic Fund

Islamic Fund

India gets new Islamic equity fund but debt market still off-limits  Full Article 

Fiscal Deficit

Fiscal Deficit

April-October fiscal deficit nears 90 pct of full-year target  Full Article 

SAARC Summit

SAARC Summit

Summit salvaged after handshake by leaders of India, Pakistan  Full Article 

Social Media

Social Media

Twitter to start tracking users' mobile apps  Full Article 

Forever21 in India

Forever21 in India

Forever21 sets sights on Indian cities, but please hold the hot pants  Full Article 

Japan Economy

Japan Economy

Japan inflation slows in October, output and spending show signs of recovery  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage