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FIIs can buy up to 100% of Infosys: RBI

The Reserve Bank of India on Wednesday said it had approved allowing foreign institutional investors to buy up to 100 per cent of the shares and convertible debentures issued by Infosys Technologies Ltd.

However, the central bank stipulated that no single foreign institutional investor will be allowed to acquire more than 10 per cent stake in the Bangalore-base software services giant.

As of March 31, foreign investors collectively owned 36.59 per cent of Infosys, which has a current market value of Rs 216.3 billion ($4.4 billion).

Infosys said on April 10 that its board had recommended raising the FII investment limit to 100 per cent from 49 per cent. Shareholders approved the change at the company's annual general meeting on June 8.

RBI approval was widely expected.

Infosys is a long-time favourite of foreign fund managers because of the company's history of robust growth in sales and profit, impressive client list and respected management.

Ahead of the central bank announcement, Infosys' shares closed up 3.5 per cent at Rs 3,382.05 on the Bombay Stock Exchange, against a 0.8 per cent rise in the benchmark index.

Indian IT stocks as a group have fallen in the past three months in line with tech stocks in the United States, the source of 60 per cent of the Indian software sector's revenue.

Also fuelling the slide was border tension with nuclear-armed Pakistan, which led many Western governments to issue warnings in late May and early June against travel to India.

That aroused concern that new contracts might be delayed, and some contracts even cancelled by clients worried about the threat to business continuity.

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