Sify ADR to benefit Indian shareholders

The proposal for American Depository Receipts by Nasdaq-listed Internet and eCommerce major Sify is aimed at creating "liquidity" for its Indian shareholders, according to a top company official.

"We are not listed on the Indian stock markets. Hence, we want to provide liquidity to our Indian shareholders by converting the Indian shares into ADRs," R Ramaraj, CEO and managing director of Sify, said in Chennai.

Chennai-based Sify's proposal for ADRs is pending with the Foreign Investment Promotion Board as it would result in foreign direct investment up to 100 per cent.

Currently, the foreign equity in Sify stands at 58 per cent. The ADR proposal had led to speculation that Satyam Computers, which holds about 32 per cent stake in Sify Ltd., may be planning to offload its stake in the venture.

However, Ramraj ruled out any such plans by Satyam. "The intention is to give a liquidity option to Indian shareholders," he said.

A spokesman for Sify also ruled out any move by Satyam to offload its stake in Sify, after the proposed conversion of Indian shares into ADRs.

The other major Indian shareholder in Sify Ltd is venture capital fund Venture Tech, which holds less than seven per cent stake in the Internet firm.

The ADR proposal was deferred by the FIPB at the behest of the department of telecom, which is reviewing FDI in Internet Service Providers.