1. Recent events concerning to us, investors tell board: Infosys

Recent events concerning to us, investors tell board: Infosys

Infosys has a widely distributed shareholding structure with institutional investors including both foreign and Indian holding close to 47% stake.

By: | Bengaluru | Published: August 24, 2017 4:27 AM
These investors have also made a pitch for the re-entry of Nandan Nilekani, one of the co-founders, to the Infosys board. (Reuters)

A dozen institutional investors and fund managers, including Franklin Templeton, HDFC Asset Management, Birla Sun Life, SBI Funds Management and ICICI Prudential Life Insurance, have written to the Infosys board expressing concerns over the ongoing developments at the IT major. “The recent developments are very concerning to each one of us,” said the jointly addressed letter to the Infosys board. These investors have also made a pitch for the re-entry of Nandan Nilekani, one of the co-founders, to the Infosys board. “After considerable thought and mutual deliberations, we strongly feel that the board of Infosys should invite Nandan Nilekani to join in a suitable capacity. In our opinion, he enjoys the confidence of various stakeholders viz, customers, shareholders and employees,” the letter said. Besides these investors, it is also understood that two large FIIs in Infosys have also written to the board criticising them the way the entire situation has been handled. “These investors are also reaching out to founder N R Narayana Murthy,” a source told FE.

Infosys has a widely distributed shareholding structure with institutional investors including both foreign and Indian holding close to 47% stake. These investors have also been active in the past seeking changes in Infosys, for example on the performance of then CEO S D Shibulal. These developments could set the stage for changes at the Infosys Board much sooner than earlier expected. The current Board of Infosys has already announced the search for new CEO as Pravin Rao is currently holding the interim role till March 2018.

NRN investor call postponed

The investor conference call by Infosys founder N R Narayana Murthy has been rescheduled to August 29. It was earlier marked for Wednesday. The call is expected to express his concerns over various corporate governance practices by the current board of Infosys.These developments could set the stage for changes at the Infosys Board much sooner than earlier expected. V Balakrishnan, former CFO and board member of Infosys has called for the resignation of Chairman R Seshasayee and Co-chairman Ravi Venkatesan to set right the situation at Infosys. The current Board of Infosys has already announced the search for new CEO as Pravin Rao is currently holding the interim role till March, 2018. This could be a challenging task for the company as its ability to attract outside talent is severely limited and the choice will largely be on a internal candidate. Brokerage house CLSA in a recent note said, “The next leader needs to capitalise on Infosys’ early hits, inherent strengths and focus more on scaling up under-penetrated service lines and verticals rather than define another grand strategy. A dose of quiet understated performance can restore client and investor credibility immensely.” According to the brokerage house, Infosys tried a grand strategy under two of its past CEOs which were built around a focus on IP and did underperform high expectations.

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