Infosys has announced November 1, as the record date for determining the entitlement and the names of the equity shareholders, to whom the Letter of Offer will be sent and will be eligible to participate in the buyback.

Therefore, according to T+2 settlement period, investors purchasing the stock up to and on October 30, shall be eligible to participate in the offer. This record date will also be for determining the eligibility of investors who are entitled to receive interim dividend to be decided at the board meeting to be held on October 24, (last year 220 per cent interim dividend declared on ₹5 face value at ₹11 a share).

The buyback offer was announced on August 19 this year. It involved buying back of 11.3 crore shares (4.92 per cent of its equity) through a tender offer at a price of ₹1,150 a share resulting in a total offer size of ₹13,000 crore.

According to SEBI regulations, 15 per cent of the offer size — ₹1,950 crore — will be reserved for small shareholders holding shares upto a value of ₹2 lakh as on the record date (which should typically be 53-77 days from the date of approval in the board meet).

High acceptance ratio likely In its note to its investors, HDFC Securities said according to its reading of recent tender buybacks conducted by companies, it expects the acceptance ratio for Infosys could be high. “Most small shareholders do not take part in such offers with the result that the acceptance ratio becomes high.”

The data published by the companies on distribution of shareholding in their annual report gives an idea on the likely acceptance ratio if all the small shareholders (holding from 1 to 200 shares) tender their shares in the buyback offer which works out to be 59 per cent for Infosys.

Infosys is buying back the shares at a premium of 27.8 per cent to the current price of ₹900 a share. Investors looking for short-term opportunity can buy the shares (up to the value of ₹2 lakh — as on the record date) in the open market and offer them in the tender offer.

25-30% return Investors can earn an absolute return of 25-30 per cent (subject to short term capital gains tax) over the next four months (average time taken from board approval to payout in recent tender offers) leading to an annualised return of 75-90 per cent.

Promoters participation Promoters of Infosys had indicated that they would offer up to 1.773 crore shares in the company’s buyback programme, with founder NR Narayana Murthy looking to offload 7.186 lakh shares. While Rohan Murty plans to tender 17.99 lakh shares, Sudha Murty aims to offload 9 lakh shares and Akshata Murty 20 lakh shares through the buyback offer .

At 21 lakh shares, Nandan Nilekani would be offering the highest number of shares in the buyback.

American Depositary Receipt holders can tender shares in the buyback by converting their ADRs to shares before the record date.

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