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Tata Sons Gets Rs 10,000 Crore From TCS Buyback

TCS’ buyback offer was subscribed more than twice the size.

Bombay House, the Tata Sons headquarter in Fort, Mumbai. (Source: BloombergQuint)
Bombay House, the Tata Sons headquarter in Fort, Mumbai. (Source: BloombergQuint)

India’s largest share buyback by Tata Consultancy Services Ltd. (TCS) has made its promoter – Tata Sons – richer by Rs 10,278 crore.

Shares bought back from Tata Sons represent 64 percent of the Rs 15,999-crore transaction. Tata Sons held 73.3 percent in the company and is entitled to up to 73.3 percent of the buyback. The Government of Singapore, Copthall Mauritius Investment Ltd. and EuroPacific Growth Fund were the other significant investors that participated in the buyback, according to the company’s exchange filing.

The software services provider rewarded its shareholders, including promoters and small investors, by buying back 2.01 percent of its total equity. The buyback, announced in February, was carried out through a fortnight-long tender offer which opened on May 18.

The IT giant's buyback came after shareholder pressure on information technology companies to reward their investors from an increasing cash pile. TCS’ peers like Cognizant, HCL Technologies Ltd. are in the midst of one.

TCS received subscriptions for twice the 5.6 crore shares it bid for and more than double the buyback size at Rs 35,555 crore.

Small shareholders tendered only half the quota of shares they could offer. The shortfall was compensated by the general category, including foreign investors, financial institutions and other bodies, who subscribed to 2.5 times their share.

Promoters of TCS now hold 73.57 percent of the company's total equity compared to the 73.31 percent before the payout. The general category's shareholding fell to 26.43 percent from 26.69 percent.