HP to divest India’s MphasiS, PE firms eye deal – report
The Carlyle Group, The Blackstone Group, Advent International and Bain Capital are said to be in talks to buy HP’s 60.5% stake in Bangalore-based MphasiS, an IT services exporter. Domestic strategic players L&T Infotech and Tech Mahindra have also been linked to the asset.
Preliminary bids for the MphasiS stake are likely to be invited by the end of June, and a deal could be finalized during the July-September quarter, Reuters reported. MphasiS has a market value of $1.8 billion.
According to local media, the entities concerned are negotiating the quantity of work that HP will commit over the long term. HP's clients are responsible for about half of MphasiS' revenue and the prospective buyers are trying to get the US PC maker to commit to outsourcing projects for 5-7 years.
HP assumed majority control of MphasiS in 2008 through its acquisition of Electronics Data Systems (EDS). EDS invested in the company in 2006, six years after it was formed. Reports of a potential sale by HP emerged a month ago.
Should a deal happen, it would be one of the largest in India's IT outsourcing services sector. In 2011, iGate Corp. and Apax Partners acquired a controlling stake in Mumbai-based Patni Computer for $1.22 billion, or 8x forward EBITDA. MphasiS is expected to command a lower valuation.
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