Blackstone to Acquire 60.5 Per Cent Stake in Mphasis
Private equity major Blackstone Group has announced its largest acquisition in India. The company has announced to buy a majority stake in Mphasis Limited, a leading Information Technology services provider offering Applications, Business Process Outsourcing and Infrastructure Services. Blackstone will acquire 60.5 per cent stake in Mphasis from Hewlett-Packard Enterprise (HPE).
HPE currently owns 60.5 per cent of Mphasis. Blackstone will pay a purchase price of INR 430 per share to HPE. Mphasis is listed on the National Stock Exchange and Bombay Stock Exchange in India. As per the Takeover Code in India, this transaction will trigger a mandatory open offer for a purchase of additional 26 per cent shares of the company and the acquiring entity has released a public announcement to the stock exchanges. Based on the open offer subscription, the purchase price consideration will vary between INR 5,466 crore and INR 7,071 crore (or, approximately USD 825 million - 1.1 billion), the official press release reads.
Amit Dixit, Senior Managing Director and Co-Head of Private Equity in India at Blackstone, said, “We are impressed by Mphasis’ strong domain expertise in Banking, Financial Services and Insurance vertical. Its deep relationship with marquee global customers has enabled it to deliver growth above the industry average in its Direct International segment. We see large potential going forward driven by Mphasis’ world-class delivery capabilities and its access to Blackstone’s portfolio of companies across the globe. The company has an experienced management team who has a clear roadmap for company’s growth. With a long-term commitment of company’s largest customer, HPE, we are confident that Mphasis will scale new heights.”
HPE and Blackstone have agreed on the terms of a Master Services Agreement (MSA) which HPE proposes to sign with Mphasis, post approval by Mphasis’ Board of Directors and shareholders. The duration of the MSA is five years with three automatic renewals of two years each. Under this MSA, HPE has proposed to commit a minimum revenue amount escalating year over year and totaling USD 990 million over the next five years. Also, Mphasis will be included in HPE’s Preferred Provider Program opening up significant additional revenue opportunities.
The sale is expected to complete in the coming months, subject to customary closing conditions and approvals.
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