Life Insurance Corporation of India on Friday said it has increased its shareholding in Infosys to 7.02% in more than three years between September 26, 2013 and February 7, 2017.
The disclosure from one of the largest public shareholders of the company comes at a time when the company’s promoters are engaged in a tussle with the company’s current board.
Since the quarter ended June 2016, the insurance company’s holding in the IT major has been steadily increasing: from 5.6% to 6.47% in September and to 6.61% at the end of December.
“Traditionally, LIC follows a pattern where they acquire stocks at low valuations and they hold on to the stock for the long-term,” said an equity analyst who requested that his name be withheld. “In this case, they have seen a buying opportunity in Infosys in the hope that the value would go up in future.”
Earlier this week, OppenheimerFunds, the third-largest institutional investor in the company and board member Kiran Mazumdar-Shaw had come out in support of the board.
As the war of words, lawyers and corporate governance consultants said the reason for the unpleasantness was primarily the lack of transparency on part of the board in addressing concerns raised by the founders.
InGovern Research Services, a proxy advisory and corporate governance firm, said Infosys had become a ‘non-transparent company’. “The whole issue is now based on rumours. If you ask whether the company can become more transparent the answer would be ‘yes’. The promoters and the board should have handled the issue in a mature manner,” said Shriram Subramanian, of InGovern Research Services.
Co-founders N.R. Narayana Murthy, S. Gopalakrishnan and Nandan Nilekani had earlier written a letter to the board seeking clarification on severance pay for former CFO Rajiv Bansal as also on the $11-million pay package offered to CEO Vishal Sikka. Mr. Murthy had subsequently also suggested that former Infosys board member and NYU Stern School of Business’ Marti G. Subrahmanyam be brought in as co-chair to the board.
“The promoters are like any other shareholder,” said a leading corporate lawyer on condition of anonymity. “They don’t have any executive power. However, they can always send suggestions to the board. Here, the shareholders including the promoters have selected a board, now they should allow the board to function,” the lawyer said.
“Discussing things in public and through the media was not the right thing to do,” said another legal expert who did not wish to be quoted.
Infosys Chief Vishal Sikka is likely to meet investors as part of the Kotak Chasing Growth Conference, on Monday in Mumbai. Mr. Sikka will deliver a keynote address at the conference organised at the Trident hotel, in Mumbai.
