Media reports that founders of India’s second-biggest software services exporter were looking to sell their entire 12.75 percent stake in the company was denied by Infosys Ltd.

Although a report carried a denial from one founder, Narayana Murthy, citing people familiar with the developments, The Times of India newspaper had reported the founders were exploring such a sale.

Saying that the “speculation has already been categorically denied by the promoters”, Infosys “has no information on any such development,” the company said in a statement.

After earlier falling as much as 3.5 percent, Infosys shares were still down 2.1 percent on Friday.

The company was forced to appoint a co-chairman to the board and a $2 billion payout to shareholders in the fiscal year to March 2018 after Infosys founders’, led by Murthy, had publicly accused the company’s board of lapses in corporate governance.

Severance payouts given to executives, including former finance head Rajiv Bansal, pay hikes given to chief executive Vishal Sikka and operations chief Pravin Rao, have been criticized by Murthy.

As President Donald Trump and his administration lean toward changing visa rules and hiking wages that could hit outsourcing firms, the Indian IT sector is facing headwinds in its biggest market, the United States, and the row comes at such a difficult time.

Due to a “challenging environment”, its ambitious $20 billion revenue target by 2020 would most likely be a struggle for the company, Sikka has said.

Noting that investors were more concerned about the broader outlook for India’s IT sector, markets would take any potential exit by promoters in stride, said Deven Choksey, promoter at KR Choksey Investment Managers.

“The business situation for IT companies remains uncertain. That’s a larger concern than that of promoters trying to walk out of the company,” he said.

With an initial investment of $250, mostly borrowed from their wives, Infosys was founded in 1981 by seven engineers, including Murthy. outsourcing in India was kick started by the company’s rapid growth.

Earlier in the week, after a newspaper reported the company’s founders were planning to sell their stakes, citing people familiar with the development, shares in India’s Infosys Ltd fell as much as 3.5 percent to their lowest in over a month.

The report in The Times of India said that their entire 12.75 percent stake, worth about 280 billion rupees ($4.36 billion), in the software services exporter, were being explored to be sold by Infosys co-founders.

Infosys founder Narayana Murthy was however quoted as denying such a move in the newspaper report. With a 3.44 percent stake, Murthy, along with his family, is the largest shareholder in Infosys.

To reach their lowest since May 5, the shares of the software company fell as much as 3.5 percent.

(Adapted from Reuters)

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