Infosys co-founders N R Narayana Murthy, Nandan Nilekani, Dinesh K and S D Shibulal’s wife , Kumari Shibulal, along with their families, sold 32.6 million shares in the country’s second-largest information technology services company on Monday, for an overall amount of Rs 6,484 crore.
The share sale led to a sharp plunge in the IT heavyweight’s share price, eroding about Rs 12,400 crore (at 62/$ ) from the company’s market capitalisation. The Infosys stock hit a month’s low during intra-day trade on Monday, before ending five per cent lower at Rs 1,972 on the National Stock Exchange.
Even as the share sale triggered speculation over the reasons behind the founders’ decision, Murthy and Nilekani, in separate statements, said the move was aimed at raising funds to invest in their philanthropic efforts. They added they had “tremendous confidence in the future of Infosys and its leaders”.
An Infosys spokesperson refused to comment, saying it was a “family decision of the promoters”.
The sale was executed by Deutsche Equities India and was carried out at an average price of Rs 1,988.87 a share. It saw participation from domestic and foreign institutional investors, Deutsche Bank said in a release.
“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,” Murthy said in a statement. “These are activities I expect to be busy with during the next phase of my life. Even after this sale, our family continues to be the largest shareholder among retail shareholders.”
The move comes months after Murthy retired from the company, after 33 years at the helm, and left its reins at the hands of Chief Executive Officer Vishal Sikka.
On the stake sale, Sikka said, “The founders continue to be among the largest retail shareholders in the company. They have reiterated their commitment to the future of the company and reinforced their belief in and support of its leadership. As I have always said, the founders have left an indelible legacy and culture in this iconic company and I respect and trust their decision of contributing towards philanthropic activities and entrepreneurship and other initiatives. In fact, contributing to the greater good is something close to the company’s heart. I am looking forward to further strengthening and reinforcing this area. So, in that sense, this action by them is aligned with the company’s values.”
Deutsche Equities said the sale had been carried out to partially monetise founders’ stake for personal reasons. Analysts feel the promoters have monetised their stake at the right time. Shares of the Bengaluru-based company have risen 21 per cent since so far this year and 8.9 per cent in the past two months.
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Despite Monday’s stake sale, the company’s founders and their families continue to hold substantial stake in Infosys. Murthy, along with his family members, sold 12 million shares in Infosys, 23.3 per cent of the family’s total holding; Nilekani and his family also sold 12 million shares, 31.3 per cent of their holding. While Dinesh and his family sold 6.2 million shares (21.5 per cent of their total holding), Shibulal’s wife, Kumari Shibulal, sold 2.4 million (9.6 per cent of her stake).
Brushing aside speculation that the share sale was carried out in a hurry, Sanjay Sharma, managing director (equity capital markets), Deutsche Equities, said it was executed over the weekend and done in a planned manner, as trading in Infosys shares in local and ADR (American depositary receipts) markets gave a very short marketing window for a block sale.
Several market sources, however, said on Monday, about a dozen institutional investors woke up to calls from Deutsche Equities India, which was offering 32.6 million Infosys shares at a four per cent discount to Friday’s closing price of Rs 2,069.70 a share.
“Even with a short deal launch period of less than five hours, we could reach out to investors in most geographies,” Sharma told Business Standard. “The issue was at a discount from the previous close; it needs to be looked at in the context of the large size of the deal. Also, it was done at levels pretty close to the all-time high of Rs 2,183 a share.”