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Infosys wants to swap stocks overseas

According to sources, Infosys has sought government approval for an enabling resolution to issue up to $50 million in stock swaps but the finance ministry has not yet cleared the Infosys proposal.

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It is learnt that the overseas acquisitions could be for corporate as well as product acquisitions, depending on the opportunity.

Infosys will be looking at acquiring businesses abroad that lead to creation of value.

As is the prevalent trend in acquisitions abroad, rather than paying the consideration in cash, it could be paid in the form of stocks by issuing either American depository receipts or global depository receipts.

Sources said the seller of the company might be keener on acquiring stock rather than cash to get better returns.

The reason being that since he has decided to sell the company, he may see good prospects in the acquirer company and would want to continue growing with that entity.

Sources said, in any case, cash is usually not available in large amounts because it is deployed in various avenues and not lying idle.

The international trend is also to acquire companies through swaps and it is felt that with Indian software companies going international it will be a big encouragement to them.

Infosys recently got the government's permission to float a $125 million ADR issue, the first by a listed Indian company. The ADR includes a $50 million stock option and will be dollar linked as per the new policy.

The ministry has, however, kept in abeyance the company's demand for two-way fungibility.

Infosys is likely to commence road shows for its ADR early next month and will be seeking listing on the NASDAQ or New York Stock Exchange.

The global coordinators to the issue are learnt to be Robertson Stevens and BT Alex Brown, while the India advisor is Enam Financial.

The size of the offering is placed at $ 50 million with a greenshoe option of 15 per cent.

The issue proceeds are likely to be used for setting up software development centres, accelerating sales and marketing initiatives and to part finance the software technology park at Bangalore.

Infosys had reported after-tax earnings of Rs 600 million for the year ended March 1998 and its performance for the first quarter was even stronger with after-tax profits surging to Rs 230 million.

- Compiled from the Indian media

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