Many Of You would have been confused regarding the buy back theory & whether to apply for it or not - Below is a solution to all your queries!
*Buy Back Theory*
When a company repurchases its outstanding shares from open market by either of the two ways- *tender offer or through open market*, this process is called stock buyback or share buyback. It is also known as Share Repurchase. The company usually buys its own outstanding stocks or outstanding equity from the existing shareholders in exchange of the cash. Such transactions are legal and generally monitored by SEBI. *Buyback has 15% reserved for retail investor with less that 2 lakh worth of holding and 85% for non retails* investor which includes promoters, MF, FII, DII etc.
*Infosys Buy Back Calculation*
Now coming to buyback calculation. Infosys is tendering 11.3 crore shares at Rs 1150.
For Retail Investors, there is 15% portion in every Buyback (as per norms of SEBI) which comes at 1.7 crore shares (15% of 11.3 crore).
*Here Retail Investors means whose holding in Infosys is less than R.s 2 Lakh.*
Out of 11.3 crore shares 1.7 crore shares is reserved for retail.
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Now as per Latest Shareholding patterns (latest as on June 2017) there are 14.55 crore shares held by 707109 Retail Investors (No. of people)
So if all Retail investors apply for Buyback then there is only 11.68% Acceptance ratio *(In simple words 11.68% of shares will be accepted for buy back which are held on the day of record date)*
Calculation is 1.7 crore shares Divided by 14.55 crore shares i.e. = 11.68%.
But usually all the people don't go for buyback, only 65% retail Investors will go for buyback, then *acceptance ratio will rise upto 18%* (14.55*65% = 9.45, 1.7/9.45 = 18%)
*The less the no. of retailers go for buyback the higher will be the acceptance ratio*
*Q) If I buy shares of Infosys on Monday will I be able to apply for buy back?*
A) Yes (But you will have to pay short term capital gains i.e 15% on the profit made)
*Q) How will I apply for buy back?*
A) You will get a tender form on your registered email id which you will have to fill according to the final acceptance ratio Or if your broker has an online facility you can directly go to the IPO section & apply it.
*Q) Should I apply for the buy back?*
A) Definitely - As 15-20% gains in 2-3 months is good enough. Infosys is a good co. to be held for long term hence one can hold the rest of the (As a certain % of your holding will only be allowed for buy back) shares for long term.