Blackstone increases stake in India’s Mphasis
The Blackstone Group has purchased shares worth INR51.7 billion ($67.9 million) to increase its stake in Indian IT services provider Mphasis by 4.01% to 56.21%.
According to a filing, the private equity firm acquired 7.4 million shares at INR691.3 apiece. It acquired majority control of the firm, formerly majority-owned by Hewlett Packard, in a deal worth INR70 billion ($1.1 billion) in 2016. In 2018, the GP secured a partial exit by selling an 8% stake for INR14.8 billion ($217 million).
At the time of Blackstone’s purchase, Mphasis shares traded at INR457. The stock reached as high as INR1268 in August 2018 but has since declined. Mphasis shares closed at INR664.5 on April 2.
Mphasis offers business process outsourcing (BPO) and infrastructure services to companies worldwide in the banking, financial services, and insurance sectors, including Blackstone portfolio companies. It employs more than 18,600 people in 16 countries, and generated revenue of INR31.4 billion for the nine months ended December 2019, up from INR25.3 billion for the same perioda year earlier. Profit rose from INR5.78 billion to INR6.84 billion over the same period.
According to a recent earnings call, Mphasis CEO Nitin Rakesh highlighted the growing consumer expectations of ‘platformization’, or app-based service delivery, across industries as well as well as increasing demand from non-core sectors like healthcare, travel, logistics and pharmaceuticals, as positive growth drivers for the future. Given a majority of clients in Europe are based in the UK, the resolution of Brexit-related uncertainty is also hoped to lead to more contracts in the future.
Other companies operating in this space include Tata Consultancy Services, Infosys, Wipro, HCL Technologies, Tech Mahindra and Mindtree. Blackstone's experience with mid-market players in India’s BPO sector includes the sale of Intelenet Global Services to French peer Teleperformance for $1 billion in 2018.
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