Infosys Block Deal

General
1

Hi Nithin,

There was a block deal of $1.1 billion today by Infosys founders. Had a few questions about this:

  1. Was this similar to a OFS (Offer For Sale)?
  2. Why did they go through Dauche Bank, why didnt they sell it in open market on the Exchange?
  3. Are there any regulations by SEBI on such deals?
  4. Infosys is listed in India & in US (NASDAQ), which shares were sold now? The ones in India or US?
  5. I see that investors from all over the world had subscribed for these shares, How can investors in different countries buy shares of company listed in India/US?
  6. Is it not logical to assume that when the promoters are selling in such bulk that they know some negative inside information and they are trying to wash their hands?
  7. There are days when Infosys had about 16% to 20% impact on stock prices on the results days, the deal that happened today seems to be bigger however the impact was hardly 5%, any comments on this?
  8. Just to confirm - all the sale proceeds the promoters got by this deal is tax free rite? 6k Crores of Tax Free Money!!!

Thanks
Sukesh

2

Sukesh, hope you don’t mind me answering this :). My answers are in line - btw, you have numbered them wrong, you have total of 8 questions, not 7 :slight_smile: …

  1. It was not an OFS transaction. An OFS is made in the open market and is available for all. What happened in Infosys is a ‘Block Deal’.

  2. Block Deals are private transactions, routed through the open market under the purview of SEBI and exchanges. DB just facilitated the transaction, they are also referred to as the book mangers in this case.

  3. Yes, SEBI has a say and have prescribed the regulation pertaining to Block Deals.

  4. Shares were sold on the Indian exchanges

  5. I’m not sure who bought these shares from the promoters but I suspect they would be fund houses from across the world. They are nothing but FIIs / FPIs

​6) This is a tricky question. We will never know the real reason why they sold the shares. The promoters claim they sold the shares for philanthropic activities.

  1. This information was made public after the promoters sold the shares. Infosys has reacted to this. It cracked 5% on the day the news was made and it has cracked nearly 10% from its recent high of 2200

  2. Yes Sir, it was indeed a tax efficient transaction!