Tata Sons intends to sell ₹11,500 cr worth its shares to TCS during the buyback on August 18, 2018. According to the regulatory filing with SEBI, Tata Investment Corp Limited, Tata Steel, Tata Industries and Tata Power would be selling ₹ 4.64 cr worth of shares, Economic Times reported.
In June this year TCS announced a ₹ 16,000 cr buyback programme. Approximately 7.1 cr shares (76,190,476) for a price of ₹ 2,100 per share. The buyback covers 1.99% of the total equity capital.
Tata Sons hold 72% stake in TCS. Tata Sons expects to fund investment programs of other Tata Group companies.
Promoters and shareholders
TCS announced promoter participation the buyback. ‘In terms of the Sebi Buyback Regulations, under tender offer route, the promoters have the option to participate in the buyback. We would like to inform you that the promoter and promoter group of the company have communicated their intention to participate in the proposed buyback,’ TCS said in BSE filing.
As per SEBI norms, 15% of the buyback must be reserved for small shareholders (upto ₹ 2 lakh holdings). TCS must set aside ₹ 2,400 cr worth 1.14 cr shares for the small shareholders.
The objective behind buyback is to focus on the company’s equity returns and to sustain the shareholder value on a long term basis.
In 2017, TCS purchased 3.60 cr shares from Tata Sons at a price of ₹ 2,850 per share. Tata Sons earned ₹ 10,278 cr and accounted for 64.2% of the total shares bought back by TCS.
Other large investors included Government of Singapore, Copthall Mauritius Investments Ltd and EuroPacific Growth Fund.
Buyback was expected to happen on Aug 18. Further details are awaited.