Market regulator SEBI has given a go-ahead to TCS to execute its Rs 16000 crore buyback plan.
The offer which opens on May 18 and closes on May 31 will see the software major buying back up to 5.61 crore shares and the offer size of the buy back constituting 2.85% of the total equity capital. The funds borrowed from banks and FIs will not be used for the buyback, the company has said.
The buyback price has been fixed at Rs 2850 a share and the methodology of the buyback will be the ‘tender offer’ route. The promoters of the company have expressed their intentions to tender their shares by participating in the buyback offer.
The shares of the promoter companies of TCS – Tata Sons (4.11crore) , Aftab Investment Company (4.8 lakh) , Tata Investment Corporation (85,000), Tata Industries (105), Tata Steel (696), Tata Power (452) shares could be tendered in the buyback process. In all 4.17 lakh shares by the promoters could be tendered.
TCS has maintained that the buyback is being done to seek a fairer valuation of the company stock and improving the return on equity and increasing shareholder value in the long run.
The buyback is not likely to cause any material impact on the profitability or earnings of the company except to the extent of reduction in the amount available for investment which the company could have otherwise deployed towards generating investment income, said the company.