Bengaluru-based software services major Infosys has billed activist shareholders as one of the risks to its future business growth because it may distract the top management from focusing on core operations.
In the latest annual report for 2017-18, the IT firm said such activism may impact the price of equity and American Depositary Shares (ADSs) negatively.
Infosys CEO Salil Parekh“Attempts to fully address concerns of activist shareholders may divert the time and attention of our management and board of directors. It may impact the prices of our equity shares and ADSs,” the company said in the annual report under the ‘Outlook, Risk and Concerns’ section.
In the annual report for 2016-17, the company for the first time, had mentioned the possible impact of activist shareholders on its functioning. “Action of activist shareholders may adversely affect our ability to execute our strategic priorities, and could impact the trading value of our securities,” it had said.
Activist investors of late have drawn much of the management's attention in some global IT firms and even compelled changes in certain aspects of functioning of the companies. For example, activist shareholder Elliott Management pushed Cognizant to shift its business model with return of billions of dollars to shareholders.
The activist US hedge fund exited IT services company last week with around 50 per cent gain on its investment.
In the December quarter of 2017, Elliott Management had bought a small stake in Wipro when it acquired 1.85 million of the Bengaluru-headquartered IT services firm’s American Depositary Receipts (ADRs) amounting to 0.04 per cent of its outstanding shares.