IT major Infosys sees fivefold tendering in ₹18,000 crore share buyback

Infosys' Rs 18,000-crore share buyback has drawn tendering of more than 500 million shares, five times the offer size, as investors evaluate entitlements, tax treatment

Information technology (IT) major Infosys’ buyback has seen tendering of over 500 million shares, 5x the offer size, according to data provided by BSE.

 

The ₹18,000 crore buyback, which opened on November 20, closes on Wednesday.

 

Under the latest buyback programme, the company is repurchasing 100 million shares at ₹1,800 apiece. Shares of Infosys last closed at ₹1,530, down 1.3 per cent.

 

Under the buyback terms, small shareholders will be entitled to 2 equity shares for every 11 equity shares held on the record date. For all other eligible shareholders in the general category, the entitlement is 17 equity shares for every 706 equity shares held. 

 

 

The acceptance ratio, however, could be different as wealthy investors could opt out due to tax considerations.

 

The IT major's promoters, including Narayana Murthy and chairman Nandan Nilekani, earlier said that they will not offer their shares in the buyback process.  The buyback amount received by shareholders will be treated as a dividend and will be taxed based on slab rates.

 

The cost of the shares bought back by the company will be treated as a capital loss, which can be offset against any other capital gains.

 

If there are not enough capital gains to offset the loss in the current year, it can be carried forward and offset against capital gains in future years, up to a maximum of eight years.