Blackstone ups stake in India's Mphasis to 60%
The Blackstone Group has completed its purchase of Indian IT services provider Mphasis from Hewlett Packard, raising its stake in the company to 60% for a total payment of about $825 million.
Blackstone's acquisition was announced in April, with the firm initially buying 106 million shares from Hewlett Packard at INR430 ($6.44) apiece. An open offer to buy an additional 55 million shares at INR457 apiece followed, but saw little interest; according to a disclosure Blackstone only purchased around 2,000 shares in the offer. Per the terms of the acquisition, Blackstone bought Hewlett Packard's remaining stake afterward at the original INR430 price.
Mphasis offers business process outsourcing (BPO) and infrastructure services to companies worldwide in the banking, financial services and insurance sectors. It employs 24,000 people in 16 countries, and claimed revenue of INR60 billion for the year ended December 2015, with profit of INR6.9 billion. Mphasis shares closed at INR569.60 on September 1.
As part of the sale, Hewlett Packard agreed to a five-year renewal of its master services agreement with Mphasis that will see it commit $990 million in revenue over the next five years, with three automatic renewals of two years each. Mphasis will continue to provide Hewlett Packard with strategic service delivery capabilities, and will be included in Hewlett Packard's preferred provider program.
Clients of Hewlett Packard comprise half of Mphasis' revenue. The company acquired its stake in Mphasis in 2008, after buying parent company Electronic Data Systems.
Blackstone is an active investor in India's BPO sector, with notable recent deals including the GBP250 million ($387 million) buyback of Intelenet Global Services from Serco Group, to which Blackstone had sold the company in 2011. The GP recently closed its latest global fund at $18 billion.
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