Infosys Gets Govt Nod For $125 M Adr

The finance ministry yesterday approved Infosys Technologies' proposal to float a $125 million American Depository Receipt _ the first of its kind by an Indian information technology company.

The ADR includes a $50 million stock-option _ and will be dollar-linked as per the just cleared policy on stock options. The ministry has, however, kept in abeyance the demand of the company for two-way fungibility.

"This can be accorded only after the issue of fungibility is resolved in policy terms. At present the finance ministry is still discussing the issue of fungibility," officials said.

As per the finance ministry guidelines, the clearance for an ADR/GDR is a two-step approach. In the first stage (as is the case with Infosys) the proposal is accorded in-principle clearance, whereby the company can proceed with its road-shows. The second stage is the final clearance, which is given once the modalities have been tied up.

Infosys is now expected to commence roadshows for its ADR early next month.

Sources close to the company confirm that the company will seek listing at either the NASDAQ or the NewYork Stock Exchange. A meeting of the company brass with bankers, the global co-ordinator, lawyers and auditors is expected to take place early next week to thrash out the final details.

The global co-ordinators to the issue are learnt to be Robertson Stevens and BT Alex Brown while the domestic merchant banking activities are expected to be handled by Mumbai-based Enam Financial.

The size of the offering is placed at $ 50 million, with a greenshoe option of 15 per cent. "The size of the offering could, however, be raised (possibly to $75 million) if the demand for Indian paper through the pre-marketing exercise, is viewed as positive,'' a source said.

Top company officials declined to comment on the launch of the issue, roadshows and further details, in view of the stringent rules and regulations set out by the US market regulator Securities and Exchange Commission (SEC).

Following the official clearance, the company is expected to write to the SEC explaining details of their plans after meetings with the bankers. Sources said that the company would definitely move in for a listing at one of the key US exchanges and it would not be in the form of a private placement. ``It is not just the point of raising funds, the crucial issue will be of exercising the stock option programme,'' a source said.

While company officials declined to comment on the issue, sources say that the issue is likely to be marketed within a price band, which has it base at Rs 3200.

Market sources indicate that at least six more corporates have lined up ADR issues. With the US markets on the downslide, Infosys Technologies' ADR issue is being followed by others who are planning such an issue. The corporates are also looking at this offering as a benchmark to fix a price for their ADR.