Infosys Technologies Ltd, the Bangalore-based global IT major, has begun the process of offering its sponsored American depository receipts to international investors for increasing its floating stock on the Nasdaq stock exchange in the US, where it is listed also.

In a notification to its shareholders on Saturday, the company has disclosed that it was sponsoring 4-6 million American depository shares (equivalent to 2-3 million Indian equity shares) against the block of shares to be divested by them.

The offer opens on July 16 and closes on July 25. The company has set August 16, 2003, for intimating the shareholders the acceptance of the deposited equity shares.

For consideration of the offer received, the company has set a 30-day limit from the date of closing the ADS offering. The deposited equity shares can be held in the escrow account till October 16, 2003.

The company has also assured its shareholders to return the deposited equity shares at the earliest if the transaction is not completed or withdrawn.

A company official told rediff.com that the underwriters would fix the offer price, based on the book value and the price of its ADSs, being quoted on the Nasdaq.

Based on the price of $60 for each ADS that was quoted at the end of Friday trading on the Nasdaq, the company would be able to raise $360 million at the rate of two ADSs for each Indian equity share.

On the Bombay Stock Exchange, the company's scrip closed at Rs 3510.70 per share of Rs 5 at the end of Friday's trading.

The offer document will be available with the shareholders from Monday (July 14). Road shows will be conducted in major international cities for the prospective overseas investors in the coming weeks.

The offer of 2-3 million equity shares will constitute between 1.32 and 1.99 per cent of the company's total 66.24 million shares.

All domestic shareholders will be eligible to tender their shares in the offering on a pari-passu (pro-rata) basis. Infosys, however, will not be offering any new shares, according to the notification.

The proceeds of the secondary offering will be proportionately paid to those shareholders, who will deposit their equity shares for the offering in the company's escrow account.

The ADR sponsorship comes in the wake of a notification and guidelines issued by the Reserve Bank of India in October, 2002.

Infosys will be the first Indian company to take advantage of the liberalised ADR scheme by the RBI.

It may be recalled that the IT major has already raised about $60 million when it floated its first ADR on the Nasdaq in March, 1999.

Its lead managers then were Bank of America, Robertson & Stephens, Thomas Weisel & Partners, and Deutsche Bank.

The company has also filed a registration statement relating to these securities with the United States Securities and Exchange Commission.

According to the RBI guidelines, the company, however, need not seek the approval of the Securities Exchange Board of India.

The additional shares will increase the float (read liquidity) of Infosys' equity to 8-10 per cent from the present 3 per cent on the Nasdaq.

The offer will also enable its Indian shareholders to rake the moolah as the company's two ADSs are being quoted at a premium of 59 per cent over the current price of its Indian scrip.

Institutional investors and the promoters are also eligible to divest a portion of their holding to overseas investors to take advantage of the premium price available.