Azim Premji does a Gates, gives away Rs88,460,000,000

Published: Thursday, Dec 2, 2010, 0:25 IST 
By Praveena Sharma | Place: Bangalore | Agency: DNA

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In arguably the largest individual philanthropic contribution ever made in India, Azim Premji, founder of Wipro, on Wednesday said he will transfer 213 million equity shares, valued at a whopping Rs8,846 crore, to a trust controlled by him, which will use the money for charitable causes.

The transfer to Azim Premji Trustee Company Pvt Ltd, which is irrevocable — meaning it cannot be cancelled ever — will be effective December 7.

The Wipro shares are currently held by certain private companies controlled by Premji. The voting rights of these shares will remain with Premji, even though his stake in the IT giant will come down as a result of the donation.

The transfer amounts to over a tenth of Premji’s total wealth from Wipro, which stands at Rs80,670 crore. He has given away 10.9% of his holding as promoter. However, since he retains the voting rights of the transferred shares, Premji will need to dilute his holding further in order to meet public shareholding norms.

The finance ministry had in June this year asked all listed entities to increase public shareholding in the companies to 25%. The announcement allowed promoters to bring down their holdings by diluting a minimum of 5% a year.

As of end-September, promoter shareholding in Wipro stood at 79.36%, according to stock exchange data. This means, Premji will have to dilute his holdings by another 4.36%, selling at least Rs3,500 crore worth of shares at current price levels.

The trust will utilise the endowment to fund, various social, not-for-profit initiatives, which are expected to scale significantly over the next few years.

The latest donation takes forward Premji’s many philanthropic initiatives.

Since its inception in 2001, the Azim Premji Foundation has worked largely in rural India, often in close partnership with various state governments, to help contribute to the improvement of quality of education. Its programmes have touched over 25,000 schools and over 2.5 million children over the years.

“We believe that good education is crucial to building a just, equitable, humane and sustainable society. We want to contribute significantly towards improvement of education in India, and through that towards building a better society,” Premji said after the announcement.

Karnataka government has recently approved the formation of the Azim Premji University under a special legislative act. The university will be located in Bangalore and aims to be operational in 2011.

Anurag Behar, co-CEO of Azim Premji Foundation (Dileep Ranjekar is the other co-CEO), said: “We have covered about 75-90 districts across the country overall. But we’ve gone really deep —- as in engaging with every school, every teacher in a district in only 6 districts. This figure will rise to 50 in the next five years.”

The purpose of creating the endowment is to financially support the activities.

So was Premji inspired by Warren Buffett’s and Bill Gates’ moves?
“We have been at this well before Buffett gave it all up —- which, in itself, is a phenomenal thing to do. We have been at this for over 10 years now. It’s Premji’s thinking,” said Behar.

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