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Infosys postpones ADR public offering

An Infosys statement said that the timing of the issue would depend on conditions in the US primary market.

T O D A Y

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A further announcement would be made when the offering is eventually brought to the market, the statement assured.

In January, the Infosys brass had told analysts in Bombay that the ADR issue is likely to take place by December 1998.

However, volatile market conditions in the US seem to have made Infosys postpone the issue.

According to analysts, the US IPO market has not been doing well since August this year. The IPO market has been yet another victim of the worldwide stock market weakness.

However, analysts also say that interest rates have been falling and this could reduce the returns on bonds. Should this happen, the flow of funds back into equity could increase.

In recent times, interest rates in the US fell by 75 basis points in three instalments. Incidentally, of the nearly 3,500 companies that have gone public in the US over the past five years, the stocks of over half are trading below their offer price.

One out of every three is down by over 50 per cent, according to a recent report in Fortune.

Infosys had begun preparing for a public offering of ADRs in the US, representing Infosys Ordinary Shares.

The Indian government has approved an offering representing shares with a total value of up to $75 million.

It has also approved the creation of an ADR-based stock option plan for the company's employees.

Infosys has already announced plans to set up software development centres abroad, whether it decides to go in for the ADR issue or not.

The company is evaluating the possibility of setting up a centre either in China or in the Philippines. The company is also looking at setting up a development centre each in Europe and the US in the next six months.

A final decision on the location of the three software development centres is likely soon.

- Compiled from the Indian media

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