The Hindu Business Line : About 3,000 retail investors offered 7 m Infosys shares

Infosys Technologies' sponsored secondary American Depository Shares (ADS) issue is expected to result in a gross foreign currency inflow of $1.6 billion.

The actual inflows are likely to be lower since this would essentially be a conversion of domestic equity into ADS. Some of those who took advantage of the conversion are essentially foreign institutional investors such as Merrill Lynch Capital Markets, Deutsche Bank Securities, J P Morgan Securities and the Government of Singapore.

But the anticipated inflow has pushed down forward premia in the domestic markets. Forward premia for one month was down to 2.1 per cent down from last week's 2.4 per cent. This flow, however, has not reflected in the spot exchange rates where the rupee remained ranged at Rs 44.90 and Rs 44.95 in view of importer demand.

Consequently, any inflows that take place would only be from dilution of the promoters' holding. Promoters have cumulatively sold 13 million shares into ADS. Promoters as a result were likely to earn close to Rs 3,130 crore. After the dilution, the promoter holding in the company is down to 17.37 per cent from 19.71 per cent.

The offering

About 3,000 retail shareholders had offered seven million shares, while institutional investors agreed to sell 10.9 million shares. The combined holdings of all the shareholders who offered their shares were 24,61,50,744 shares.

The offering was lead-managed by ABN AMRO Bank N.V., Hong Kong branch and N M Rothschild & Sons (Hong Kong) Ltd.

This latest offering is expected to further bring down the premium between the local shares and the ADR. The premium currently stands at around 12 per cent as compared to 50 per cent two years ago.

Infosys, which got listed on the Nasdaq in 1999, has subsequently floated two sponsored ADS issues in 2003 and 2005. The size of the previous ADS issue in May 2005, wherein Infosys converted 1.6 crore shares at $67 each, a premium of 34 per cent to then prevailing domestic share price, exceeded $1 billion.