Infosys Technologies will go ahead with its proposed ADR issue despite the troubles in the capital markets, which have now impacted the US markets, especially the Nasdaq market where the technology stocks are listed.
"There are no changes in our plan as of now," said Vallabh Bhansali, chairman of Enam Financial Consultants, advisors to Infosys Technologies.
Analysts say that while Infosys should be able go through with its $75 million ADR issue, the software firm may not be able to get the premium to its domestic share price, as was anticipated earlier.
"It will be able to place the issue and get a price, which is close to its ruling market price but may not be able to command a premium," said a international fund manager.
Analysts also say that the company does have some time to wait for the market to stabilise. "Since they are planning to launch in the second week of October, there is still some time for the market to stabilise and the poor sentiment to disappear," said an infotech analyst with a foreign brokerage house.
Infosys fell on Tuesday by Rs 104 to close at Rs 2448 on the Bombay Stock Exchange.
However, with the Nasdaq market bouncing back on Tuesday by two per cent by 2000 hours IST, analysts felt that the drop could be an aberration as investors took some of the profits they had made.
The concern about the Infosys issue comes on the back of the worst day in the history of the Nasdaq market Monday, when the market suffered its largest single day fall in its history.
The Nasdaq composite Index lost eight per cent of its value in one day, while the Dow Industrial average fell by 6 per cent.
The Infosys ADR issue will be used towards expansion and establishing of new software facilities, besides acquiring software companies in the US in future.
The company has named San Francisco-based NationsBanc Montgomery Securities Inc and Hambrecht Quist to handle its ADR issue.
The extraordinary general meeting (EGM) convened by Infosys Technologies on January 7 1998 passed a special resolution for raising $75 million by way of American Depository Receipts (ADR) to finance expansion activities. It also approved the company's proposal to increase authorised share capital from Rs 20 crore to Rs 30 crore.
