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Wipro shares jump on report of $1 bln sponsored ADR

BANGALORE (Reuters) - Shares in Wipro Ltd surged more than 5 percent on Thursday after a television channel reported India’s No. 3 software exporter was likely to launch sponsored $1 billion ADR issue.

Engineers attend to calls from abroad inside a call center in Gurgaon on the outskirts of New Delhi in this December 3, 2003 file photo. REUTERS/Kamal Kishore

ET NOW said, citing unnamed sources, Goldman Sachs, Morgan Stanley, Citigroup and Credit Suisse were likely to manage Wipro’s sponsored American depository shares offering.

A spokeswoman for New York-listed Wipro said the company would not comment on market speculation.

At 02:40 p.m. (0910 GMT), shares in Wipro were up 3.1 percent at 737.35 rupees, after having risen as much as 5.1 percent to their highest since April 2000 after the report, in a Mumbai market that was up 0.5 percent.

ET NOW said Wipro’s holders of Indian stocks might tender their shares in the sponsored ADR issue to take advantage of an arbitrage opportunity, as the firm’s American shares were trading at more than 40 percent premium to the India shares.

Wipro will not receive any proceeds of this offering, which would be distributed to participating Indian shareholders, the TV station said.

Wipro’s billionaire founder chairman Azim Premji, who turned the family’s ailing vegetable oil business into an IT services group, might also tender some shares to pare the promoter’s stake from nearly 80 percent now, the channel said.

Wipro, which integrates technology systems, develops software applications and manages call centres, listed in New York in 2000, a year after the U.S. market debut of bigger rival Infosys Technologies.

In 2006, Infosys launched a sponsored programme of 30 million American Depositary Receipts (ADRs) that raised $1.6 billion and saw locally listed stocks converted into ADRs.

The deal increased the size of Infosys’s U.S. float, part of the company’s efforts to lift its profile with global investors.

Wipro, which counts Citigroup and Cisco among its 800-plus clients, is expected to report a 15 percent rise in quarterly profit on Wednesday, helped by increased demand for outsourcing services by its overseas clients.

Reporting by Sumeet Chatterjee; Editing by John Mair