BackInfosys declines after founders offload shares
Four of the founders are said to be offering 32.6 million shares at a fixed price of Rs1,988 apiece
PremiumPhoto: Bloomberg
Bangalore: Families of four co-founders of Infosys Ltd have sold about 32.6 million shares, or 2.8% of the shares outstanding of the company, for about ₹ 6,484 crore, according to a report by Deutsche Equities India Pvt. Ltd.
The sale of shares was for an average price of ₹ 1,988.87 apiece to foreign and domestic institutional investors, the company said, identifying the sellers as N.R. Narayana Murthy, Nandan Nilekani, K. Dinesh and the wife of co-founder S.D. Shibulal.
Former Infosys chairman Murthy said in a statement: “Our family has sold a minor part of our stake to continue various activities including our efforts to encourage entrepreneurship and our personal philanthropic efforts."
The move fits into a growing trend among well-heeled professionals or corporate executives to plough money into good causes or invest in start-ups (or both).
The founders’ move to sell shares did create some panic among shareholders.
“In the short term, you can’t deny the fact that it will read as negative. So probably in the short term you might see share prices coming down further, but in the long term I wouldn’t read anything negative out of it," said Ankita Somani, an equity analyst with MSFL, a part of the Marwadi Institutional Group.
However, some of the co-founders tried to assure investors by saying that they still held a considerable stake in the company and had faith in the management.
Nilekani told The Economic Times that even after this sale, his family continues to be one of the largest shareholders in Infosys. Media reports have previously said that Nilekani is looking to start an online education not-for-profit that will help bridge the education gap in India.
Infosys shares fell 4.88% to ₹ 1,968.60 apiece on BSE on Monday, while the benchmark Sensex shed 1.19% to 28,119.40 points.
Infosys shares fell as much as 5.3% to ₹ 1,958.50 in intra-day trade on Monday on BSE.
In an attempt to turn around the company, Infosys chief executive Vishal Sikka has been trying various methods to restore the company’s worth.
Last week, Sikka indicated that he plans to improve the company’s training, induction and designing programmes, increase fixed salaries and average bonus payouts, encourage quarterly promotions, focus on existing key clients, while trying to get new clients of higher quality.
He has also been trying to use artificial intelligence, automation and innovative technology to “dramatically improve" the services that Infosys offers its clients.
The shares were sold to partially monetize their stakes for personal reasons, including betterment of society through various philanthropic activities, according to the Deutsche Equities report.
“It’s the first time the promoters are doing it in concert. And in the long term it shouldn’t affect Infosys because these guys are anyway out of the company. It’s just that when you suddenly see three or four of the executives selling their stake at one point in time, and this happened just after they stepped down, so there’s just a little bit of concern whether this is going to happen over the near-term as well," an analyst said, speaking on condition of anonymity.
An Infosys spokesperson declined to comment. Deutsche Bank was the sole book-runner for the deal.
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